4 Unexpected Ways Small Businesses Lose Money

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If you deal with the bills at home and you run your own small business, you’re used to receiving two sets of bills through the mail for the same utility. If you compare the numbers, you may have noticed that although domestic utilities are relatively inexpensive, business charges for the same services are much higher. It may be convenient to use the same provider for phone, internet and security — but are you just blowing your budget unnecessarily? Here are four places where your company might be losing money, plus a simple guide to cutting your costs.

4 Unexpected Ways Small Businesses Lose Money

1. Internet Providers — or SuperHighwaymen?

Internet charges are based on speed, so the faster your connection, the more you’ll pay. That speed is measured in megabits per second, and a higher rate means you can download vital documents more quickly (or just Tweet a picture of your lunch faster than your fellow diners).

It’s a simple and logical way of assessing charges, but the difference between business and personal rates may surprise you. Let’s take Comcast — the largest internet service provider in the US — as an example.

At the time of writing, Comcast offers domestic customers “Blast Plus,” a plan that gives customers 50 Mbps of download and 10 Mbps of upload for $49.95 per month.

Business users can access Blast Plus too, but for the same speeds, they’ll have to cover costs that are about 4x higher — $199.95 every month. Yes, a business account gives you a little more in terms of customer service and additional e-mail addresses, but when you consider that Gmail is a free alternative, can Comcast really justify that sizeable increase in the monthly fee?

It’s not just Comcast: AT&T charge their domestic users $49.99 per month under theResidential Elite Plan,” offering up to 50 Mbps of download for that price. Business users can claim that too — but they’ll have to pay $557.80 a month.

So what can you do? Our advice is to shop around and find a dedicated business plan tailored to the needs of the corporate user. Business internet use may be expensive, but these companies need you as much as you need them — so don’t be afraid to make some calls and haggle for the best deal!

2. Telephone Charges Are Off The Hook

Small businesses simply can’t survive without a phone, and many will have the receiver affixed one ear or another on an almost permanent basis. Phones are vital for customer service, taking orders, and fielding inquiries, and the providers know it. However, in this instance, demand isn’t driving prices down.

Let’s start with Verizon’s Freedom Essentials Residential Plan where $54.99 per month buys you a generous package including voicemail, domestic user caller ID, three-way calling and unlimited long distance calls. Sounds like everything the small business owner could possibly need — and they can have it too, for an additional $23.51.

The package can be extended with some great add-ons: unlimited international dialing costs $32.99 each month for domestic customers, or $61.99 for any business user making the same calls.

Once again, the convenience of using the same provider for home and company utilities could be costing you unnecessary bucks. Try a bespoke business plan that is specifically intended for the corporate client.

3. Company Security – Preventing Break ins Without Breaking the Bank

Business security is another area where increased demand isn’t necessarily driving down prices, as providers remain aware that few companies will operate without adequate protection. And once again, you may find that equipment designed for personal use somehow comes at a higher price the second it receives corporate branding.

Take the “Business Security Package” from GE Residential, which is supplied with an up-front fee of $99.00 together with an additional charge of $49.00 per month for ongoing monitoring. It’s a comprehensive system — but compare it with the Platinum Option sold to homeowners, which is cheaper even though it uses equipment that costs twice as much to produce.

Once you sign up you can put on the handcuffs, as GE tie you to a three-year contract during which time the equipment supplied is likely to become outdated. It’s a bit like buying a prom tux and expecting it to fit when you dress for the college reunion 30 years later.

One man to fall foul of a long contract term was Harry Schechter, CEO of Temperature Alter who felt obliged to sign up for the full three years when he went security shopping for his own company.

“They wanted to charge me 50 to 60 dollars a month for monitoring, and they wouldn’t even schedule an installation until I signed a three-year contract,” Schechter states.

“I thought that was outrageous — my business was growing, and I didn’t know if I’d be in the same place or need the same things in three months, let alone three years. Still, I needed to protect the stuff in my office, so I signed the contract. It took two whole days for the installer to call me. Luckily, I got tired of waiting and found SimpliSafe, a company that sells wireless home security systems with no-contract monitoring plans. I ordered my system online and installed it myself in 5 minutes, and in even less time than that I called ADT and canceled my contract.”

Flexibility in utility contracts is important for any small business, and contract tie-ins fail the wiggle-room test immediately. However, as Harry Schechter discovered, there are alternative suppliers who listen to the client and tailor packages according to their needs.

Advances in research and development have also brought us wireless technology that allows customers to monitor remotely, and there is a small selection of no-contract plans. So if things are going well and you need to upgrade, there are no financial penalties — and if the worst happens and your business needs to fold, you aren’t going to be hit by ongoing payment demands.

4. Who Can You Trust?

According to the Association of Certified Fraud Examiners, employee theft from small businesses rose by 17 percent over the past three years. As a result, one in three employers are now falling victim to this worrying crime.

From simple theft of goods all the way up to larger accounting frauds, the situation continues to rise — but how can you avoid it?

The US Small Business Association publishes a useful set of six tips that can reduce your exposure to employee crime. These include checking references, emphasizing conduct guidelines, and performing regular audits. The report also highlights ways in which you can identify problems before they escalate beyond your control.

Managing the financial side of your company is challenging enough — by avoiding common traps, you can save money and concentrate on helping your business thrive, rather than just barely stay above water.