In business, primarily, your number one goal is to make as much money as you can.
Secondly, however, you will also want to look into what can be done to reduce your business expenses, because obviously, unnecessary spending is the last thing any business needs.
To help strengthen the bottom line of your business, reducing your expenses can be just as important as bringing in as many sales as possible, but herein lies a problem.
You see, in business, some expenses are unavoidable, and some are extremely necessary.
After all, as the saying goes you have to spend money to make money. So how do you reduce unnecessary spending?
Well, first you need to track your expenses and get a detailed breakdown of exactly where your money is going.
Once you’ve identified this, you can then look into cutting back on expenses that are not required.
Initially, it may be a little time consuming, and it may only save you a little bit here and a little bit there, but small amounts do quickly add up to larger amounts.
If you’re looking to keep tabs on your expenses, here’s a look at a few ways of tracking and reducing your monthly expenses.
Tracking your expenses
To begin with, we’ll start off by looking at what you can do to track your expenses so you can get a better idea of exactly where your money is going, and at whether or not you could cut back and make some savings.
A few tips for tracking your expenses include:
Always read your account statements
Your monthly accounts are very important, and to help ensure you know where your money is going, try to take an inventory of all business accounts, and be sure to read them thoroughly on a regular basis.
You don’t need to do this every day, but try to go through everything at least once per week.
When you get into the habit of reading your statements, you will get a sense of where your money is going, and roughly when.
Eventually, you should be so familiar with your accounts that you’ll have pretty much memorized all of your regular expenses anyways.
If you are too busy, you can always have an accountant go through your accounts for you.
Make categories for all expenses
Again, this may sound like a lot of work, but once it’s done, life will be much easier, plus you can always have your accountant handle this for you.
Go through your accounts and categorize all expenses, I.E food and drinks, travel, utilities, loan repayments, etc.
By doing this you can look at each category individually, and can help pinpoint where your cash is going.
For example, if you’re paying X amount of money on stationary, you could look into different stationary stores and see if they have what you need, but for less money.
Even if it’s only a small saving, these small savings quickly add up.
Use accounting software
Account software such as SlickPie, is incredibly useful for tracking your business expenses, and best of all, it’s very user-friendly as well.
Accounting software can allow you to create spreadsheets for tracking your expenses, plus it will allow you to do more complex processes such as importing transactions from your bank, and so on.
Many accountants use SlickPie and other similar forms of accounting software to help their clients manage their expenses, and the results speak for themselves.
Reducing your expenses
Now that we’ve looked at how you can track your expenses, let’s focus on the good stuff and look at how you can reduce your expenses and save yourself more money.
A few proven strategies for actively reducing business expenses include the following:
Look into cheaper alternatives
This may sound painfully obvious, but it’s so important that we just have to get it out of the way.
If you’re looking to reduce your expenses, then look at what you can do to purchase whatever it is that you need for your business, but for less.
Monthly internet providers and phone contracts, for example, can all be negotiated and there are always great deals to be had.
If you’re spending too much on your phone bill, look into other providers and see if they can give you what you need, but for less. The same goes for stationary, for food, for
The same goes for stationary, for food, for drink, and pretty much anything else as well. It does take time, but if you spending a few additional hours on a Saturday morning, renegotiating your phone and internet contracts, well then in most people’s minds that would be money well spent.
It does take time, but if you spending a few additional hours on a Saturday morning, renegotiating your phone and internet contracts, well then in most people’s minds that would be money well spent.
Purchase items instead of rent
This will obviously all depend on the nature of your business, but if you are renting equipment or anything else for that matter, look into purchasing these items rather than renting them. Company
Company cars, for example, could be purchased instead of being rented, because overall, you will end up spending less money in the long run.
This is important because eventually, thanks to depreciation, your accountant should be able to sort you out some pretty lucrative tax benefits.
Negotiate lower credit card rates
As a small business owner, your credit card is going to be a very valuable tool to have at your disposal.
Your credit card will be used for travel expenses, for any minor business purchases, and for working capital.
Now, if you’re paying, say, 17.5%, look for a credit card which offers 0% on transfers and purchases for a prolonged period of time.
By doing this you can gradually pay off your credit card debts, without paying the banks heavy interest in the process.
Paying interest is something we should all resent because we are literally paying for nothing, as we still have to pay off our debts, plus extra just for the banks.
If you can’t find a credit card offering 0%, try to get the debt paid off as quickly as you can.