Everyone wants to manage their expenses, whether it’s in their personal lives or their professional ones. And many business owners are so focused on growing their sales, they forget to manage business expenses. It is possible to control costs without jeopardizing quality in your business.
Track expenses. The first thing you need to do is make sure your expenses are tracked and allocated to the “right bucket”. Categorizing your expenses can give you a look at where you spend the most money and track cyclical changes in those expenses throughout your business cycle. This can help with future purchasing, identifying potential discounts from vendors or spending waste.
Keep business and personal expenses separate. Separate credit cards for purchases and bank accounts are a must. Even when I worked at a company and had to use my personal card for travel expenses, I used a different card than i normally would for my personal expenses so I could track my spend and make sure I didn’t miss any expenses.
Consolidate purchases. Typically the more you purchase from the same vendor the better pricing you’ll receive. So perhaps one item you need is 50¢ cheaper at another vendor, in the long run, consolidating purchases will give you more buying power. Also, never underestimate the cost of processing invoices from multiple vendors.
Outsource. Outsource instead of employing a full time person. Outsourcing an expert can seem like you are spending more money, but if it’s done faster and more accurately you’ll save money. For example, maybe a handyman can fix your electrical but it’ll take twice as long as hiring an electrician. Do you need to hire a full time human resources director instead of a consultant to assist with recruiting or dealing with employee policies. You need to determine how many hours and what level of expertise do you need and can afford before you start adding head count.
Go paperless. Instead of printing invoices and mailing them out can you email your customers? Can you make electronic payments to your vendors instead of cutting and mailing checks?
Cloud storage. The cost of purchasing and maintaining servers for your various software or email programs can be expensive. Look into cloud versions of your software to decrease costs, not only of the servers, but the space necessary to store those servers. Also, determine whether you need physical paper copies of records or if electronic record keeping will suffice. If paper copies are required, then look into off site secure storage instead of taking up valuable office space.
Process Improvement. Many times your workflow is inefficient, causing extra steps to complete a task or involving too many people. Look at your processes and determine if there are any ways to cut out steps or people to streamline your process, thus saving you time and money.
Easy expenses. Save money on easy expenses such as swapping out regular lightbulbs for LED lights, not heating or cooling your offices when no one is there, checking for organizational discounts. If you’re a member of a chamber of commerce or a professional organization, check what vendors they offer discounts with. I was shocked by how much money I saved on printing paper when I used my chamber’s discount.
Review vendor contracts annually. Don’t allow for automatic mark ups in your contracts or automatic extensions. Make sure your vendors are reviewing their expenses to give you the best price and there may be other vendors in the marketplace that want to give you a better deal.
Engage your employees. The more your employees are engaged whether it’s by identifying inefficiencies, turning off lights or eliminating wastes, the more opportunity you have to save money and can manage business expenses.