4 Ways SMEs Spend Too Much Money And How To Stop It

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ways smes spend too much money

One of the worst things you can do in small business is under invest. Under investment can inhibit and strangle a small business and prevent it from reaching its true potential. It can prevent them from being able to capitalize on opportunities that could see them grow and flourish.

It can cause them to cut corners in ways that alienate customers and compromise the quality of the products and services they offer. Worst of all, it can cause them to stagnate, ticking over at a consistent pace that simply isn’t fast enough for the roiling ocean of evolution and revolution that is the 21st century business landscape. While these thrifty SMEs limp from day to day, they’re quickly overtaken by competitors who are prepared to invest in research, development and staying agile.

That said, there’s a universe of difference between prudent spending in areas that are likely to generate significant return and facilitate growth and blanket spending across the board. As important as it is to invest in your business, it’s also vital to keep a watchful eye on wasteful spending. Many SMEs find themselves spending way too much on the following areas.


It’s not at all uncommon for new businesses to overestimate how much stock they will need to get them through their early days. The trouble with this is that while your store may be brimming with attractive products, your liquidity will be tied into your inventory. This can inhibit your cash flow and prevent you from taking opportunities which could improve your business like new tools or software to boost productivity. If you aren’t able to take advantage of opportunities like this, you’d better believe that your competitors will.


Staying ahead of the technological curve is a big part of keeping your business agile, and it also aids your branding. Your customers will see that you’re prepared to invest in the best for them and that you have growth in mind. Just be wary of spending on tech for appearance’s sake or spending in ways that will not benefit your business. This is why managed IT support is so useful for nascent enterprises. An outsourced IT service will take a proactive approach to your business, monitoring your solutions to ensure that they’re suited to your needs and scaling them up or down as necessary.

Bad hires

When you’re new to hiring, firing and perspiring, it can be a steep learning curve. A candidate who can appear to be a dream at interview stage can turn out to be a very different prospect when they settle into their roles. Even given chance after chance, they don’t appear to show any interest in giving their job the care and attention it deserves. At this point, every penny you spend on them is a waste of money. Firing people is never pleasant, but why pay money for an employee who is actively compromising your brand?

The little luxuries

If you’ve gone from being a corporate executive to running your own business, you may be a little too accustomed to the finer things in life. Your previous employees would have thought nothing of flying you out in business class or putting you up in a fancy hotel. If you expect to live this lifestyle at your own company’s expense, however, you could place a serious drain on your liquidity which could be catastrophic for your business.