This is a guest post for the Aventive Studio blog written by Jill Goodwin.
There are two ways to maintain your health and wellness business’s growth trajectory. The first is to reduce your operational costs in a methodical, sustainable way. The second is to increase your revenues through improved sales and targeted advertising techniques.
Unfortunately, all too many businesses in the industry overspend when it comes to their basic needs. They pay more than they should for the equipment and services they need, step beyond the boundaries of their budgets, and base these budgets on inaccurate and overblown estimates to start with.
It’s essential that you reduce these common areas of overspending if you want to ensure the financial health and sustainability of your company. Here are the areas in which health and wellness businesses most frequently overspend, and why this can happen, despite your best intentions.
The 6 Most Common Areas of Overspending
You will already know just how important it is to have talented staff members on board. They are the key to driving growth from inside your ranks—but they’re also costly to hire and keep.
Every employee your company hires will cost you a salary, taxes, benefits, and training costs, among other expenses. Many health and wellness businesses hire staff prematurely, growing their team too big, or too quickly. This can lead to massive staff-related expenses that don’t necessarily provide equal reciprocation for your business.
Effective marketing can be a pricey exercise, but without it, your business simply won’t attract the customers it needs to stay afloat. You need to focus on spending your advertising budget in the most efficient way possible to boost your ROI and keep costs down.
Many companies who don’t have high-level marketing strategies and trustworthy advertising partners in place end up spending far more than they should on marketing efforts.
3. Telecommunications and Internet Connectivity
The internet is king when running a business in the modern age. Your company needs telecommunication services and accessibility to function, but you need to be aware of how much you spend on these services.
Countless businesses are overspending on their telecom services as we speak! They end up saddled with bloated contracts, plenty of hidden fees, and more telecom services than they can realistically make use of.
The result? Significant, unnecessary expenditure that could instead be diverted into other areas of their businesses that desperately need funding and attention.
4. Business Software
Health and wellness enterprises work with business software to varying degrees. Some hardly use it at all, while others use specialized software products to drive their website traffic, get visitor data, and translate leads into customers.
Some software can help your business to operate optimally and boost your overall productivity, and others are redundant and may not be helping your cause at all. Each service will charge you a subscription fee, regardless. It’s up to you to critically assess which tools are truly furthering your cause, and which you can cut from your monthly budget without negatively affecting your operations.
5. New Technology
Any health and wellness business worth its salt keeps up with the latest trends, innovations, and technology in its industry. It can be tempting to equip your company with the latest technological devices at sky-high costs.
However, if you’re constantly updating your business’s tech, you’re probably spending too much. Using older devices and programs can save you astronomical sums of money without you having to compromise much on real-world functionality.
6. Office Equipment
Your physical office space might just be your largest area of overspending. Far too many companies pay hefty amounts of money for traditional office rental and land-based services and equipment. These funds would be better off put to use enhancing their online presence.
The question is this: Do you really need a physical office to begin with? If you and your team can work remotely instead, you could downsize on your office space (and costs!) or swap them out altogether in favor of cost-effective online operations.
Why Health Companies Overspend
You might have realized at this point that you’re spending more than you should in one or several areas of your operations. If you want to address this overspending effectively, you need to figure out exactly why it’s happening to begin with. The most widespread reasons for business overspending are:
1. Poor Choices in Vendors
Many health and wellness vendors are reliable, and offer quality services and goods at respectable prices. Unfortunately, this isn’t true for every vendor. Choosing to work with unreliable, pricey, or dishonest vendors can seriously harm your finances.
2. Failing to Audit or Analyze Your Business Expenditure
So many companies overspend because they don’t critically analyze instances of excessive spending. You need to develop an auditing and analysis strategy to pick up and correct unnecessary costs.
3. Lack of Negotiation
A large part of running a successful business has to do with negotiation. Most of your vendors, service providers, and staff members will be more than willing to negotiate terms, prices and benefits, but only if you initiate the conversation.
4. No Initial Budget
Businesses that don’t launch their operations with a clear budget in place are at risk of consistent financial mismanagement. Without financial guidelines, you’ll be more likely to agree to any quotes that your vendors send your way.
5. Failure to Plan
Every business needs a plan, no matter how big or small. A well-constructed business plan not only includes budgets and financial projections, it creates a roadmap for all aspects of operation. Businesses with no plan in place will be prone to overspending, as they’ll have to plug holes and fill gaps as they arise.
Cultivate Healthy Financial Habits
The health and wellness industry is highly competitive, and your business needs to remain financially healthy to preserve its competitive edge. Pay attention to your expenditure. Adapt strategically when you identify areas of your business where you can reduce spending, or correct them.
Begin by thoroughly analyzing and auditing your expenditure and pinpoint areas that need improvement. Create a plan of action to address these issues. Then apply it consistently across your operation to produce the results you want to see.
About the Author
Jill Goodwin is a content champion for a variety of online publications. She often covers topics that cater to business owners and entrepreneurs with a strong focus on finances, productivity, management, and a few other topics.