How To Avoid Incurring Business Losses

How To Avoid Incurring Business Losses

Anas Bouargane 03/08/2020 6
How To Avoid Incurring Business Losses

Losses are never a good sign, but they must be accepted as the price of doing regular business.

How To Avoid Incurring Business Losses

 

To use an example worthy of illustrating this point - consider a head chef in his busy inner-city kitchen. He knows that he’s going to serve around 2-300 covers tonight, and that means he and his team will be working hard. He has his ingredients prepared, the stock ready to go, and the ovens fired up. 

He knows that through the act of performing that service tonight, some mistakes will happen. It’s inevitable. His junior chef may drop a fillet of fish on the floor. That incurs a cost, because he must immediately bin that stock as it is now designated non-edible. He has suffered a loss of the cost he incurred to purchase that particular piece of fish. But as he paid in bulk, and he cannot chastise his younger chef for making a one-off mistake, he simply writes it off. That’s fine. Provided it doesn’t happen often, he’ll still make a profit.

Any business operates like this. But what if we could improve, (and by that we mean lessen) the effects of these outcomes? We’ll discuss that, below:

Use Reliable Services 

Use reliable services you can trust. For instance, consider your logistics in regards to freight shipping. A loss of a van, or damaged goods, or being charged over and above the rational rate can leave you to incur big losses, especially if these difficulties are repeated over time. There’s no reason why they should be. So, in order to save money on freight shipping, find a service that provides you with a reasonable, measurable quote, and can guarantee your goods will arrive safely. Reliability is all.

Heighten Accountability 

It’s also important to heighten accountability in your firm, where that’s possible. If staff handle an order, have them mark their name down and verify it. Use security cameras to prevent thefts. Ensure that best practice is followed at all times, pending disciplinary measures. This is not about cracking down on your staff and treating them as untrustworthy, rather it’s about getting to the core of an issue if it takes place. From there, you can implement methods to avoid such issues next time.

Inspect & Verifiy 

It’s important to inspect and verify your production points from time to time. When you accept delivery, do you ensure that the raw materials have been kept appropriately? Do you check the temperatures? Do you note down issues that could be improved next time, or try to get to the source of a logistical issue? Instead of accepting difficulties as part of the trade, such as the fish in our introductory example, consider what changes you could make to lessen that likelihood? Do your staff need more training? More checks and balances? Or, sometimes, less red tape? Weigh up your options - it’ll really help you improve.

 

With this advice, we hope you can more easily avoid incurring business losses in the best manner.

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  • Andy Skelton

    Don't overspend money on useless business items

  • Charlie Glover

    Big changes are coming to our finance department

  • Aaron P

    Thanks for the tips

  • Emmanuel Larson

    Digitise every single process !!!

  • Joseph White

    Useful tips, cheers !

  • Stevie Brown

    Thanks

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Anas Bouargane

Business Expert

Anas is the founder of CEF Académie, a platform that provides guidance and support for those willing to study in France. He previously interned at AlphaSense. Anas holds a bachelor degree in applied economics from the University Paris Sud.

   

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