In endeavouring to boost your bottom line, you could end up focusing most of your efforts on increasing the amount of money that is coming in. However, you might not be paying enough attention to another factor influencing your profit margins: your financial expenditure.
As a business owner, you could become so preoccupied with day-to-day aspects of running your company that you haven’t realised how many unnecessary little costs your firm has accumulated. Those minor expenses can all add up to a major drag on your company’s monetary resources.
This would be a pity – because, if you set aside time to spend assessing the financial structure of your business, you could surprisingly speedily uncover various areas in which savings can be made. Here are just some examples of how you could rein in spending.
Make your company more energy efficient
You might consider many elements of your company’s current spending on energy to be essential to the smooth running of the business. After all, a sufficiently warm and well-lit workplace can be crucial to your employees’ wellbeing and, therefore, productivity.
However, you may not have realised that there are various ways of keeping your office fit for a thriving workforce while still trimming your energy use and, thus, carbon emissions.
Lowering that office’s temperature setting by just 1°C could reduce your heating bill by 10%, the UK’s Federation of Small Businesses notes. Another option is switching your energy supplier; the result could be a 23% cut in your energy bills, according to the FSB.
More closely handle your cashflow
Take into account monetary commitments like your payroll as you put together a cashflow forecast. This forecast should also consider the sales, purchases and costs that your business is likely to have in the future being predicted.
This advice comes from Clive Lewis, who is Head of Enterprise at the Institute of Chartered Accountants in England and Wales. He explains that this kind of forecast “will highlight when the business might run low on cash, and can form the basis of an action plan to remedy a situation before it happens.”
Thankfully, if you use accounting software, much of this forecast can be made automatically rather than in a more manual and potentially cumbersome fashion.
Tweak your expenses on vehicles
Your business could rely on an array of vehicles for meeting many of its routine responsibilities. However, various awkward little charges could be attached to use of those vehicles.
Fuel is one obvious source of financial pain when using vehicles; however, look closely at how you are paying for that fuel. In the UK, it’s possible for a small business to pick up an FSB Fuel Card which unlocks more favourable rates on both petrol and diesel.
Insurance can be unhelpfully costly, too – particularly if it is for a relatively risky type of vehicle, like a truck. Fortunately, by using a comparison site like that of insurance broker Call Wiser, you can more easily obtain a cost-effective policy for truck insurance in the UK.
Outsource an array of rudimentary responsibilities
Some of your company’s responsibilities might be so crucial or demanding that outsourcing them could seem risky. However, you might still notice that some less essential operations could be handed over to outside sources in a way that saves money without curbing quality.
For example, if your company is in e-commerce, you could arrange for Amazon to hold and distribute your stock. Meanwhile, if you are running a manufacturing firm, some manufacturing could be outsourced to save on production overheads.
You might soon find such success with outsourcing that you can even scale down your corporate premises and so reduce the money you need to spend renting or maintaining them.
Conduct quarterly assessments of your spending
While it would obviously be ideal for you to constantly know your firm’s spending habits, you might find it more manageable to, each quarter, thoroughly analyse that spending, as Entrepreneur advises. In the process, you could discern how necessary particular expensesreally are.
You could find that your company is still paying subscription fees for software it no longer needs. This might even be software you originally signed up for years earlier; it can be too easy to take out a subscription and then end up forgetting about it even as the software eventually falls out of use.
However, by “trimming the fat” on a quarterly basis, you can keep ensuring that all of your money is going on things capable of directly helping your firm to flourish.