Where Businesses Lose the Most Money

image of a balance sheet and a calculator, Businesses Lose the Most Money

Author: Dean Hunter

Published: 22nd June 2017

Running a business in this unpredictable economic climate is challenging to say the least. Keeping customers happy while balancing the books is a trick that many SMEs simply can’t manage, even if sales forecasts look promising. This is because many business owners don’t realise where they lose the most money. They underestimate areas like staff turnover and training, and focus on market trends and finding cheaper suppliers, which only makes a slight difference to revenue.

The statistics for small businesses are not great. An infographic from Smallbiztrends.com reveals:

50% of small businesses fail within a year

95% of small businesses fail within the first 5 years

30% of small businesses are constantly losing money

Only 30% of businesses are breaking even

Regardless of the size of the company, it’s a fact that in many businesses cash is leaking out of every seam without being properly monitored. Make sure that every aspect of the organisation is properly costed, analysed and reviewed on a regular basis so that money can be saved in all departments. Read on to find out where the majority of businesses lose the most money.

Cutting Corners

We’re all guilty of cutting corners now and again – usually to save money or time. However, in the long run, cutting corners can only damage your finances. If you’ve opted for a product of lesser quality, then customers aren’t going to be impressed and will probably go elsewhere next time – hurting your profits. Perhaps you’ve cut corners training new employees so they can start working sooner. Once again, this could come back to bite you in the future if they make a hug mistake because they weren’t adequately trained, or they decide to get another job because they don’t feel up to the task.

Cutting corners will impact your bottom line at some time, so why not avoid it altogether.


Many businesses aren’t aware of the shocking cost of a disengaged workforce. It has been reported that these unmotivated employees who don’t connect with the company’s values cost the UK £340bn each year. Moreover, research from brand agency Maverick revealed that investing just 10% more in staff engagement could allow UK businesses to add £2,700 per employee per year in profits. This translates to an extra 3% of the nation’s GDP.

A business thrives on the quality of its people. Without engaged employees who understand the company values and appreciate their job responsibilities as part of the wider business objectives, the business won’t last long. Engaged employees are more productive and motivated, and more likely to have job satisfaction. Which leads onto the next area where businesses waste money every day…


Staff turnover can be a problem in many sectors, but reducing turnover and improving training is essential if you need to save cash. It’s extremely costly having to replace employees on a regular basis, so consider how investing in learning and development opportunities along with culture and engagement could help you save money in the long term.

When a staff member leaves the company, not only are you losing out on skills, talent and the money you spent training them – it can often impact productivity for the rest of the team, as other staff will now have to work harder until a replacement is fully trained. It can also impact group morale and influence other employees to leave. Then think about the time and cost of advertising the vacant position, followed by the recruitment and hire process. Companies with high staff turnover have to go through this route on a weekly basis.

The employer cost of replacing an employee has been calculated and stands at over £30k. Staff turnover is the place to focus all of your energy if you really need to start balancing the books.

There’s no doubt that businesses are losing serious money in these areas, but many fail to realise how they can turn it around. If you’re determined to create a happy, engaged workforce and a company with a small turnover then speak to our culture specialists today. [email protected]