Staying within the limitations of your monthly business budget isn’t always easy, especially when unexpected expenses arise. However, as a small business owner, controlling expenses is critical to your company’s survival.
Financial issues are often the result of a lack of monitoring and the small but steady expenditures that build over time. Incorporating these simple but effective strategies into your day-to-day operations will help you and your team get a better handle on your basic business spending and stick to a monthly budget.
Know Where Your Money is Going
Not keeping track of expenses is arguably the most common – and potentially costly – way that small businesses waste money. Establish a simple expense reporting and accounting process for every department. Monitor your budget as frequently as you can, but no less than once a month. The more attention you give to your accounts, the easier it is to spot discrepancies and overspending. You can then make adjustments to your expense plan to better meet the needs of your business.
Budget Time Better
Managing time effectively is as important to business growth as managing your money. If you and your team are constantly scrambling, your budget is bound to take a beating, from paying overtime and late fees to missing deadlines and failing to cut the best possible deals.
In today’s app-heavy culture, there are a multitude of options to help small businesses track time and increase efficiency. These apps can help you monitor not only how you plan to spend your time, but where you actually spend it. Once you identify exactly how you and your team are wasting time, you can focus on practices and processes that will increase efficiency, improve productivity, and help employees make the most of each hour.
Avoid Late Fees
Make sure to pay bills on time to eliminate expensive late charges. Many small business owners simply do not know or keep track of their payment due dates, whether they are for credit cards, loans, or rent. If this is an issue, change all of the due dates to a similar day of the month and modify your accounting and payable routines accordingly.
Polish Your Negotiating Skills
Negotiating is an essential business-building tool that can help small business owners save money, improve efficiency, and boost profits. But while asking for what you want may be all in a day’s work, even the most successful small business owners can be uncomfortable at the bargaining table. Make negotiating part of your business routine and encourage your employees to do the same. Aim to save at least 10 percent on any offered price, and find additional budget savings by re-negotiating existing agreements wherever possible. The key is to avoid taking rejections personally; successful negotiators consider “no” the beginning of a transaction, rather than the end.
Banish Supply Waste
From paper cups and printer cartridges to pens and paper towels, the supplies your office uses on a daily basis represent a serious financial investment. Investigate more economical and eco-friendly solutions. Something as simple as storing your supplies in one central location instead of various areas of your workplace will help you keep better track of inventory levels and avoid over-ordering or outages that lead to emergency purchases at retail prices.
Evaluate Employee Perks
Employee perks are a great way to improve morale and build camaraderie. However, if Monday morning bagels or annual gym memberships are going unused, the costs add up to a drain on your business budget. If this is the case, evaluate your perks, eliminate those that are going to waste, and replace them with things your team will actually use. Keep in mind that what motivates employees most is how they are made to feel by the organizations they work for and the bosses who manage them. Small business owners who provide a positive environment and show genuine appreciation have happier, more dedicated employees and higher company morale.
Resist the Lure of the Latest Tech
Avoid purchasing or upgrading technology tools unless your business really needs them. While you certainly can’t afford to be behind the curve, frequent or unnecessary expenditures on Smartphones, tablets, or the latest tech gadgets can decimate your business budget. Commit to purchasing only what you need when you need it, and budget for routine hardware and software upgrades ahead of time. Remember that the key reasons for buying business equipment are to increase productivity, lower costs, and ultimately to boost profitability.
Ask for Employee Input
Commit to educating your employees about the impact of expenses on your business’s success. Ask them for ideas on how to cut costs, or consider creating incentives like contests that will inspire them to lower unnecessary spending. Reward the winners and reinvest the results of cost-cutting efforts into your business and your team.
Paying attention to these details may be tedious, but it is essential to maintaining the financial health of your business. Summit Financial Resources knows that even the most disciplined business owner can experience a temporary budget shortfall. Whether you need working capital to purchase new equipment, expand into new products, or invest in more efficient processes, we are here to help you achieve your goals.
Working Capital Financing is a few clicks away.
Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.