Spending $

Small Biz Book – Post #6

Given the timing of this post, I sincerely hope I don’t disappoint anyone that is researching ways to increase spending money for the holidays. While I have a few side gig ideas, I’m actually back to a small business focus after a bit of a hiatus on the topic. In my world, sitting at home typing about the ways I’ve seen businesses waste money = me not out spending any.

I’ve paid the bills for a small office furniture installation company, a medium-sized paint company and a Fortune 500 corporation. It is safe to say that I have seen money wasted to varying degrees. Now, I know full well that wasting money is a relative term. For example, as far as personal spending goes, some might think false eyelashes isn’t a smart purchase while I see massive dividends in no time or money wasted on mascara. So, while I must admit that I haven’t quite reached my goal of millionaire on a personal level, I feel confident that the examples of spending that I will share next will leave most of us in agreement that, if avoided, will lead to a more successful business.

I enjoy starting with the most obvious example because it’s honestly too obvious, and, therefore, makes it humorous. The small-sized installation company employed under 50 individuals. Our main expense was payroll, as we contracted out labor to other office furniture companies. With many seasoned employees receiving checks for over 40 hours at a $20 hourly rate, our weekly payroll stayed consistently between $15,000 and $20,000. After the owner and I split ways, I continued running the accounting side of the business for 2 months. During this time, I was witness to thousands of company dollars being spent weekly on party nights with liquor and strip clubs. It’s true that, for tax purposes, a crafty accountant could write off half of the amount spent on these particular expenditures for entertainment or maybe even personnel expenses since it was spent on the owners and a handful of employees. However, while spending this money, the company didn’t maintain enough money to cover payroll the following week. This left me wondering each week what bills I wouldn’t pay so that I could pay the employees.

The second example could be reason for debate, especially with less liberal beings living outside of certain, more accepting/progressive states (namely: Colorado, California, Michigan…). The middle-sized paint company was owned by a man whose money decisions proved his desire to control his employees’ decisions while on or off the time clock. In other words, I paid bills in the thousands every month for random drug tests. One month an entire shift would be pee-tested, followed by a month where names were drawn out of a hat. This may not seem particularly wasteful to some, especially if the testing was completed on employees who operated company machinery. However, the kicker was when a great employee, who arrived each day on-time and eager to work, would test positive. At this point, more thousands would be filtered into counseling for said-employee. I found it interesting that there was actually an attempt to convince a great employee that they had a drug problem for their recreational, off-the-clock, marijuana usage.

In the amount of time that I have been with the Fortune 500 company, I have seen the above two examples implemented the right way. Namely, money was spent on employee entertainment with a spirit/fun day lunch (when there was no question of making payroll for the entire staff the following week) and drug tests administered only when an employee had an accident in a company vehicle. However, I have still seen a wasteful money habit considering the practice spans 400 facilities. Even though we have the funds to pay bills on time, and many vendors offer discounts when bills are paid early, our corporation pays invoices at a net 60. This means that we assume and accept all late fees that come with this method. I’ll be the first to admit that I pay hella late fees on my personal bills, but it’s because I don’t have the money to pay on the due date.

Outside of these three examples of throwing company money down the drain, I have heard stories of owners making questionable money decisions, like leaving tools unlocked or out in the weather due to laziness which, undoubtedly, led to more money being spent. To wrap it up, it seems the Small Biz What Not to Do #5 is:

Don’t spend company money on items when the funds could be better spent in ways that would enhance the business as a whole. Or, framed positively: give a second thought about each dollar that is dispersed.

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