How can I take control of my overheads and cashflow?
When you first start out in business, you are usually very conscious of every cent you spend! Often reviewing costs is an area that is neglected once your business is up and running. Investing some time on a cost reduction plan would be an extremely profitable use of your time.
There are two basic ways to keep your money box full:
- Make more money,
- Spend less money.
You maximise income through effective sales and marketing, professional development and better business operations for business growth focus. But when you lose sight of spending and costs it can be, well, costly.
Let’s look at a business that operates as a retailer and distributor. They purchase their products in bulk and then sell direct to businesses. When volumes and revenues were high, the pricing became extremely competitive and the margins very tight.
In these types of businesses, once everything is accounted for, it is possible that if the owners pocketed three percent for themselves they became wealthy. But they lose money fast if they are down by a few percent. For any business it is a tiny margin of error between boom and bust. It is critical to controlling overhead costs.
Tiny percentages can make the difference between Easy Street and Struggle Street in any business. “Look after the one percenters and the result will look after itself,” sport coaches are often heard saying.
But there’s a reason budgeting and business cost management is often overlooked. Because it’s often considered boring.
Who wants to sift through various telecommunications plans or bundled options? Nobody wants to analyse, compare and negotiate quotes from multiple suppliers. Who wants to spend their time assessing the options available for leasing equipment?
Here are some things to consider:
It is worth businesses spending more money upfront to save money in the future in some cases. For example a business may get a better return on investment by a business setting up an automated e-marketing system, or buying an expensive printer.
Play to your strengths:
If finding cost reductions really isn’t your thing, consider outsourcing this task to an accountant or move away from a low margin business.
Regularly review your supplier contracts:
Regularly reviewing your long-standing agreements with your suppliers will ensure they are still competitive. There may be some opportunities to negotiate a better deal or switch suppliers. It might cost you a few days in lost income by putting together a smart, tight and comprehensive cost reduction plan.
This business cost management exercise would be an extremely profitable use of time if it could add five percent to your bottom line year after year
If you think your business might benefit from bookkeeping services. Maybe you need someone to lodge BAS. Perhaps you need a bookkeeping software health check, setting up your books. Then above all don’t hesitate to get in touch. We’ll tailor a package that sets you up correctly from day one.
Contact Timewise Financial Solutions on 0419 181 082 or by clicking here today.