Your cash flow and profit margin are critical factors in the survival of your business, no doubt, but while you’re fixated on these important things, there’s a tendency to overlook the small but steady streams of expenses draining your business account and contributing nothing to your return on investment (ROI).
Here are three ways your business could be losing money:
1. Undocumented soft costs.
Soft costs are sneaky. Unlike hard costs which are typically direct payments made to vendors or the prices of ‘hard’ assets such as office equipment, soft costs such as call credit and transport fare tend to slip through the cracks and can be easily missed during accounting.
There’s no magic to tracking soft costs. Be diligent enough to document every business expense, not just the obvious ones. If you make a one-minute call to a client or customer, note the cost. It’s not stress, every naira counts.
2. Bad customer service.
Do not underestimate the power of a dissatisfied customer. With social media and chats apps everywhere, people talk now more than ever before and it’s only a matter of time before news of one person’s bad service experience spreads and does serious damage to your business by discouraging current and potential customers. For an even scarier picture, a 2011 global survey found that customers are more likely to talk about their bad service experiences than the good ones. Are you awake now?
Good customer service is non-negotiable in 2016, make it a pillar of your business.
3. Inefficient marketing.
“Everyone distributes flyers now.” – Someone at the office.
So you print a thousand copies and send your staff to major roads to ambush pedestrians or you hire flyer distributors to skate through traffic and throw them into passing cars.
How do you measure the impact of such haphazard marketing? What is the return on your investment?
Before you spend money any kind of marketing, have a clear way to calculate the return on investment. For example, you should ask every new customer how they heard about your business. Another way to measure the efficiency of an offline marketing campaign is to get a unique phone number exclusively for that campaign. It’s as simple as buying a new SIM card and tossing it in a cheap phone. That way, even if you’re going to hand out flyers everywhere you will have a method for measuring efficiency. For online marketing, read the guide provided by the platform you choose thoroughly. If you are still confused after that, hire a professional. You don’t have to do everything yourself.
Margin delivers local insights, practical advice and resources to help Nigerian entrepreneurs build and maintain profitable businesses.
