By Bill Edmonds
We know that sales and incoming revenue are what make a business grow. So it stands to reason that outgoing expenses, if left unchecked, will be the downfall of a business.
Monitoring cash flow and expenditures isn’t the most exhilarating aspects of owning or managing a business. But it’s the most important one. Many organizations habitually spend beyond their means. Some even manage to stay afloat by careful juggling their losses and income.
A better strategy to keep your business viable is to closely monitor the necessary costs of running a business and always being on the lookout for ways to reduce or eliminate expenses that hinder growth.
Below are five basic ways to reduce business expenses that will help you put profits into building your company.
- Use analytics to measure the success. It’s important to have a solid and up-to-date digital marketing plan and fully functional website using current SEO strategies. But without a way to analyze the effectiveness of those efforts, what’s the point? Digital tools like Google Analytics and Facebook Analytics offer you a window into user activity: how and whether they’re interacting, if they click through to your website, how long they spend on a page, and whether they invest in your product or service.Your assessment of this compiled data helps you determine the return on your investment for each marketing initiative. If the ROI doesn’t meet your expectations, invest in other areas that will result in future growth.
- Purchase equipment suitable for your business. You don’t need every piece of equipment to be brand-new or top quality (usually the most expensive). Used and/or refurbished equipment and furniture may be suitable for your needs. Another option is buying equipment that serves multiple functions. For example, an all-in-one printer/scanner/photocopier or a conference table that doubles when not in use as a place for workers to eat their lunch.
- Go green. If you haven’t already, convert your business to a paperless environment. Your likeminded eco-friendly customers will love you, and you’ll save money by reducing your paper purchases. You’ll probably save money in the long run by not needing to rent storage space for all those old boxes of files, too. Instead, look into secure digital storage on a cloud-based server
- Preventive maintenance and repairs. Nothing lasts forever and most things break or need an upgrade before they need replacing. Don’t wait for things to break down (which always happens when you need them most). Instead, invest preventive maintenance, like tune-ups and service agreements. Doing so is almost always cheaper than waiting until a major malfunction occurs and you’re faced with a major overhaul or cost of replacement in a pinch
- Strategize your taxable deductions. If you aren’t taking advantage of business deductions, you’re probably sacrificing a great deal of money. If you’re not tax savvy, see the advice of a knowledgably accountant or tax advisor for guidance on how to legally reduce what you owe in taxes as much as possible.
It’s too risky to try sustaining extravagant spending and not looking for ways to reduce cash flow. Always be on the lookout for ways to have cash on hand for what’s genuinely important to maintain and grow your business.