why do businesses waste so much money?

The biggest ways small businesses waste money

Ways Small Businesses Waste MoneyMost small businesses waste money in one way or another. Whether it’s overspending on office supplies or hiring too many employees, there are a number of ways that small businesses can unintentionally throw away their hard-earned cash.

Of course, not all waste is created equal, and some forms of waste can be more damaging to a business than others. Working with a limited amount of finance is never easy, but the task becomes even more difficult for business owners when they begin to spend cash they shouldn’t, or don’t need to be spending.

We are going to walk you through some of the main ways money gets wasted in the modern business world, so that you can avoid making any of those costly mistakes in the future. Your venture may not be struggling financially at the moment, but you could still be falling into traps you’d otherwise avoid.

If you are a small business owner looking to find ways to keep tabs on your spending and save cash throughout the financial year, you have come to the right place.

Different businesses have different problems

One thing you should consider is that certain problems will not plague all types of business. If you work in a particular industry, or your company operates in a certain sector, you may find yourself dealing with financial issues that aren’t relevant to other business owners you know. Therefore, there is no one single solution that can answer all monetary problems within the wider world of business.

By avoiding the financial issues that are relevant in your area of business, you can save money more effectively and improve your cash flow in no time at all.

Without further ado, here is a list of the biggest ways small business ventures unnecessarily waste cash:

Incorrect marketing strategies need to be avoided

Marketing can be a rather costly affair, especially for smaller businesses that don’t have the spare cash to compete with their larger competitors. With that being said, of course marketing can be a useful tool when used efficiently. Consequently, you must find a healthy balance, and not throw too much money into marketing without first understanding what you want to achieve.

Marketing effectively isn’t a case of ‘the more you spend, the more you will generate’. If you are looking to build on your leads, prospects, clients, and partners, there are multiple ways to go about the process. The single answer here isn’t to pull the trigger on huge marketing campaigns that are going to publish across a wide array of platforms.

Market research is needed in this instance if you are going to do things correctly. Look for where your target audience is and create engaging content for them. Beyond this, you will have to publish this content in the right areas, which are unique to the customers you are looking to connect with.

Keep in mind that marketing your small business venture is not simply a case of go big or go home; you need to be calculated and act sensibly. Also, don’t be drawn to the most expensive form of marketing from the get-go, and instead choose to select a campaign that will fit around the theme of your organisation.

Don’t set on too many staff members at once

Once you employ your first member of staff, you may see how your business builds on its foundations and begins to flourish. This leads many small business owners into thinking that the more staff they have, the more they will be able to get done, and the more cash they will ultimately generate. This, however, is not always the case.

Think about what your firm requires to run its daily operations. Do you need to take on more members of staff to complete the essential tasks? If not, would hiring more people help your business to develop and ultimately complete more work for a higher number of clients? If the answer is no, then you likely already have more than enough.

The more members of staff you take on, the more wage packets you’ll have to finance at the end of each month. Is your business now in a spot to be spending a large chunk of extra cash each month? Do you really need the extra assistance that will be provided by taking on more staff? These are a few of the questions you need to ask yourself before you start sending out any job advertisements. 

For all you know, your current crop of staff members may be feeling slightly underutilised, so don’t be afraid to ask them to cover some extra work every now and then. This may help to highlight their importance to the company and give them a boost in confidence, shining a light on their skillset.

Hiring staff is an expensive process, and one that often stabs a knife through the financial heart of small businesses in the UK. Do not fall into this costly trap if you can comfortably afford to avoid it. You are a small business for a reason, achieving growth and being ambitious does not need to apply to every single area of your organisation.

Trying To Look ‘Big’

Trying to look ‘big’ is something that a lot of small businesses do in order to appear established. This can be in the form of renting out a large office, even if they don’t need all the space, or by hiring a lot of employees.

Unfortunately, this doesn’t always mean that the business is actually doing well. A better way to measure the success of a business is by looking at things like their profit margin, reach or impact. Appearing big doesn’t always mean that a business is thriving.

Wasting money on too much outsourcing 

There is no denying that outsourcing work-related tasks can be a useful method of getting work done, at a high standard, and with a great deal of pace. Although, some small business ventures can get ahead of themselves in this area of thinking, and ultimately become carried away with outsourcing, which is a popular trend today.

If you have had success when outsourcing one part of your business operations in the past, such as social media duties, it does not mean that you need to begin outsourcing as much as possible. All work completed outside of the office space will cost you cash. This is likely money that you cannot truly afford to throw away.

Think about both the negatives and positives that come attached to outsourcing. On one hand you will gain expertise, save time within your workspace, and be able to get more jobs completed. Although, on the other hand, you’ll give up some of your creative control, and you will be spending cash that could otherwise be saved by completing the work yourself.

Purchasing advanced technological equipment

If you are running a business in this current day and age, regardless of what industry you operate within, you are likely going to need some high-tech pieces of equipment. For instance, a laptop or desktop computer will be required to complete daily tasks, but perhaps you don’t really need the most expensive printer on the market.

Be aware that a major reason that modern small businesses leak cash easily, is because they make large purchases they do not need. This is particularly apparent in the case of technological equipment. Do you need the faster running computer available today if you are running a record shop? The answer, more than likely, is ‘no’.

You could easily waste hundreds, or even thousands of pounds, if you choose to blow a huge portion of your business’ budget on tech. Only buy what you need and don’t deck the office out with Mac computers, if you can get by with Dell.

This will, of course, all depend on what your business does, because as we said at the start, different businesses have different needs. Therefore, companies spend cash in opposing areas from one another.

Poor expense tracking 

If you aren’t keeping tabs on what you spend, you are likely going to rack up a hefty tab and run yourself right into financial chaos! Henceforth, it is absolutely key that you keep a keen eye on the cash that leaves your business, regardless of what the expense is. If money is leaving your company, you need to know about it, and you need to make a note of it.

Sometimes business owners are so focused on saving money, that they forget about the simplest way of doing so: keeping an eye on the cash that flows out of the company. Your outgoings are just as important as your incomings, if not more so.

If you allow certain expenses to go unnoticed for too long, you will find yourself low on available cash and probably begin to struggle with affording even the most basic payments. You can put a stop to these problems before they even begin by tracking all your expenses and staying on top of the outgoing money from your business venture.

Avoid attending too many trade shows

While attending trade shows can be a great way to build up your business’ reputation and further spread the word of your venture, it is also a fast-track way of wasting cash. You want to raise your venture’s visibility within your niche as much as possible, of course, and it is wise to attempt to do this. However, you can certainly go overboard here if you fail to limit yourself.

Attending trade shows, and having booths at them, can be a rather costly affair. If you continuously do this without first considering the amount of finance you’re spending, you will run into a monetary headache after a while. This is something you should try to avoid doing as much as possible.

Try to only attend the shows that will truly help your brand to develop and shine while in the presence of others. Not every show will be worth your while, so don’t spend cash on the ones that aren’t going to become a meaningful investment.

Remember that there are many other ways to showcase your products and get your brand’s name out there to the masses, such as social media. Think outside of the box and replace the less worthwhile shows with your own creative thinking, it will be cheaper and likely result in a better outcome.

Also, while you are representing your brand at trade shows, you should avoid going overboard with the visual aspect of your booth. This is because decorations and the like all cost money that you don’t need to be spending. Make sure your brand is noticeable while present at a show but avoid going too over the top; sometimes the minimalistic approach is the best.

Wasting office supplies 

People being wasteful with office supplies is far too common within the industry. Regardless of what type of business you run, your office supplies are likely being underutilised before being tossed in the trash. You need to put a stop to this as soon as possible. Not only will you become more environmentally friendly, but you’ll also start saving cash.

Stop wasting money by wasting office supplies and tell your staff members to do the same. Perhaps many of the supplies you currently purchase on your monthly order aren’t needed within your business. Do you really use all that paper? Is the office in need of more pens and other bits of stationery? Start asking yourself some of these questions before ordering items you can do without.

You can put a stop to this commonly found issue by cutting down paper usage by utilising email for staff messaging, reusing the backside of documentation as a form of taking notes, only use printer ink when you must rather than needlessly print out documents that are destined for the bin.

There are many other ways you can cut down office wastage too, so think about where you are overdoing things and make a change.

Wasting Energy

Wasting energy is something that most businesses are guilty of, whether it’s leaving the lights on when no one is in the office, or failing to properly maintain their HVAC systems. However, by taking some simple steps to reduce energy usage, businesses can cut costs and save money. Turning off equipment and lights when not in use is an easy way to reduce expenses.

Installing newer appliances may also save money in the long run because they tend to be more energy-efficient. Additionally, programmable thermostats can be used to control temperatures and help reduce heating and cooling costs. Finally, using lower-wattage light bulbs or compact fluorescent bulbs instead of incandescent light bulbs can also help reduce energy usage. By taking these steps, businesses can make a significant impact on their energy bills.

Overpaying Insurance

Overpaying insurance is something business owners do often because they are not aware of how to manage their policy in an effective way. Insurance is protection against losses, but many times these losses are minor and the business owner can handle them without help. This is where raising deductibles comes into play; By doing this, you are reducing premium costs.

Overlapping coverage is another issue business owners face when it comes to their insurance policies. Overlapping coverage happens when two or more policies cover the same thing. This often happens when a business owner has multiple policies from different companies. Business owners should review their policy periodically to make sure there is no overlap in coverage. Lastly, another way to save money on your insurance premium is by shopping around and comparing rates from different companies. By following these tips, business owners can avoid overpaying for their insurance coverage.

Paying to much for Business Finance

It’s no secret that business finance can be expensive. Whether you’re taking out a loan to start a new business or refinancing an existing one, the costs can quickly add up. But what exactly are you paying for? In most cases, the answer is both interest and fees. Interest is the cost of borrowing money, and fees are charges assessed by lenders for various services, such as processing a loan application or closing a loan.

Together, these costs can make business finance quite expensive – sometimes even prohibitively so. Thankfully, there are ways to reduce both interest and fees. One common strategy is to shop around for the best rates and terms from multiple lenders. Another is to negotiate with your lender for lower rates and fees. By taking these steps, you can help ensure that you’re not paying more than you need to for business finance.


In today’s economy, small businesses are under immense pressure to cut costs and increase efficiency. However, in many cases, small businesses waste money without even realising it. For example, office supplies are often over-purchased and not used before they expire. In addition, small businesses often pay too much for rent and utilities by signing long-term leases without shopping around. Furthermore, many small businesses fail to take advantage of tax breaks and other financial incentives that could save them thousands of pounds each year. By taking a closer look at their spending, small businesses can make significant savings without sacrificing quality or service.

Lee Jones Profile Image
Business Finance Expert at PDQ Funding

Lee Jones is a seasoned Business Finance Specialist with over two decades of invaluable experience in the financial sector. With a keen eye for market trends and a passion for helping businesses thrive, Lee has become a trusted advisor to countless organizations seeking to navigate the complexities of finance.