The Smarter Path to Financial Returns

The PSA Blog

Helpful news, tips and business advice for small to medium business owners about how to maximise profit, minimise waste and grow and protect your business.

Discover how to stop your business from haemorrhaging money and start thriving with PSA Capital Investments.

Is Your Business Haemorrhaging Money? It’s Time to Find Out Why

In business, cash flow is critical. But what do you do when your company starts losing money faster than you can keep track of it? If your business is haemorrhaging money, it’s a red flag that can’t be ignored. At PSA, we’re not just about lending a hand; we’re about offering a financial lifeline. Let’s identify common culprits and map out strategies to stop the flow.

What Does “Haemorrhaging Money” Mean?

In essence, if your business is haemorrhaging money, it’s losing cash at an alarming rate. This could be due to inefficiencies, unchecked expenses, or other financial sinkholes. It’s like having a wound that won’t stop bleeding—except instead of blood, it’s your hard-earned cash trickling away.

Inefficient Operations

It’s not just the grand processes that need streamlining – sometimes, the devil is in the details. For instance, manual data entry is not only time-consuming but it’s also prone to errors, leading to further costs down the line. Embracing digital solutions can automate mundane tasks, freeing you and your team to focus on more productive activities.

Unmanaged Subscriptions

It’s all too easy to get lured into subscribing to the latest software or service that promises to revolutionise your operations. However, without regular use or tangible ROI, these subscriptions become financial black holes. Conducting a bi-annual audit of all subscriptions and trimming the fat can lead to surprising savings. Ask yourself, “When was the last time we used this?” If it takes a while to remember, it might be time to cancel.

High Overhead Costs

Leasing office space in a prime location or maintaining facilities you barely use can severely impact your bottom line. This is where creativity and negotiation come into play. Consider remote work policies to reduce the need for large office spaces or renegotiate your lease terms. Sometimes, switching to energy-efficient appliances and systems can significantly reduce utility costs. Every dollar counts, and optimising your overhead can result in substantial annual savings.

Debt Mismanagement

Debt isn’t inherently bad, but debt mismanagement is. High-interest debts or multiple loans can quickly become overwhelming. Refinancing or consolidating debts into a single, lower-interest loan can reduce monthly outgoings and interest paid over time.

Remember, proactive debt management is key to maintaining financial health. Prioritising debts with the snowball or avalanche methods can systematically reduce your liabilities. The snowball method involves paying off debts from smallest to largest, building momentum as each balance is cleared, while the avalanche method targets debts with the highest interest rates first, saving money on interest over time.

Inadequate Pricing Strategies

Setting prices is more art than science – balancing costs, market demand, and perceived value. However, failing to regularly review and adjust your pricing model can lead to your services being undervalued or not covering costs, especially as your business evolves. Conduct market research to understand what your customers are willing to pay, and don’t shy away from adjusting your prices to reflect the quality and value you provide. It’s essential to ensure your pricing strategy supports your business goals and growth trajectory.

How to Resolve Financial Bleeding

  • Conduct a Financial Audit: Start with a thorough review of your accounts to pinpoint where the money’s going. Identifying leaks is the first step to plugging them.
  • Embrace Technology: Automate where possible. Modern software can streamline operations, manage subscriptions, and even forecast cash flow.
  • Cut Unnecessary Costs: Once you’ve identified them, it’s time to cut off the financial dead weight. Every dollar saved is a dollar earned.
  • Restructure Debt: Look into consolidating debts or renegotiating terms. Lower interest rates and manageable repayments can stop the bleed.
  • Reevaluate Your Pricing Model: Ensure your prices cover your costs and reflect the value you provide. Don’t be afraid to adjust if necessary.
  • Explore Alternative Revenue Streams: Diversification can bolster your income. Consider new markets, products, or even passive income avenues.

At PSA, we understand that the financial landscape can be tough to navigate alone. That’s why our financing solutions are designed with your unique needs in mind. More than just loans, we offer a partnership to secure your business’s financial health.

Stop the Bleed, Start the Growth

Recognising and addressing where your business is haemorrhaging money is crucial to survival and growth. With the right strategies and a little help from PSA, you can turn the tide, stop the financial bleed, and achieve your goals.

Feeling the pinch and not sure where to start? Contact us on (03) 9847 7689 to discuss how we can help you secure your business’s future.

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PSA’s Director, Peter Marmara-Stewart, is a highly successful business owner and finance professional in Melbourne. As a certified Financial Planner with over 15 years of experience in business finance, accounting, and asset management, he provides clients with unparalleled expertise in asset protection, debt elimination and business restructuring. Call (03) 9847 7689 and see how Peter and the PSA team can help you get on the smarter path to financial returns.