Inbal Axelrod
When it comes to determining the profitability of your business, there are two main variables to consider: the revenue coming in, and expenses going out. Ensuring you are staying on top of these two variables is crucial if you want to save money, continue to operate, grow and prosper.
However, even with excellent management, the smallest increase in expense can have a huge impact on company profitability and success. So, take a step bad and carefully manage expenses to see what you are doing well, and what can be improved.
Of course, there are many things that need to be accomplished to do so for example, you must take active steps to reduce expenses, understand your expenses, predict any future expenses – and how that will change your overall costs, and strategically take on expenses.
To help out, we’ve gathered some major business expenses that may impact your business -depending on your industry- to assist you in managing them effectively.
Equipment and Tools
Whether you’re looking to spend thousands on a piece of manufacturing equipment, hundreds on an online tool, or simply purchase a printer and other electronic devices, your equipment expenses will add up—fast.
If you choose to invest in let’s say, an online tool that demands monthly payments, you must determine if the outsourced work outweighs the cost. If not, it would be best to tackle it in-house.
When looking for equipment, try to save money by purchasing multi-function devices, or second-hand ones. It will not only save you from having to buy extra equipment -that with time decreases in performance- but also, reduce your expenses drastically.
Rent and Wages
These two costs fall into the biggest expense categories. As you need employees and need to provide them with a space to work, there is no avoiding these expenses. When it comes to employees, keep your expenses low by only hiring the people you need. Having extra employees to fill out the office may look great when you have visitors, but is an unnecessary expense. Also, be sure to set a fair salary, but one that won’t break the budget.
In terms of rent, you can expect to pay a high rate in big cities such as New York and London. But, even in the big cities, try to keep your space small – as long as it’s big enough to hold your employees-, and to try and rent in an area that is far from the heavily populated part of the city. Even more, if you have a bigger space than you need, you can consider subleasing a part of the office to make up the extra cost.
Avoid Wasted Time
It’s crucial you find a way to optimize productivity levels for you and your employees, as essentially, wasted time equals wasted money. So, minimize distractions in the office, utilize time tracking software to determine how long your employees spend on each task, develop a pro-work company culture – employees will respect you more if you set clear expectations and stick by them.
More so, ensure you cut out all wasteful practices, such as unnecessary meetings. Think to yourself: is this meeting truly necessary? Or could I solve this issue in a strategic thinking session, email, call, or some other method? If you find yourself answering yes, then going ahead with the meeting achieves nothing more but wastes valuable working time that could have been spent on another task.
If you do decide that a meeting is necessary, ensure that only those that must be there attend, keep it short, and lay out an agenda for the meeting that must be accomplished by the end of it. A clearer and shorter meeting help keep the focus directed on the issue at hand and avoids valuable time being wasted.
Focus On What You Do Well
Ever heard the phrase ‘less is more’? Well, this remarkably applies to businesses and their outputs. Having too many lines and services, can actually do more damage than good.
So, scrutinize what you do on a regular basis. Question and challenge yourself to ensure you eliminate any low-value service lines that you offer. If you know you do something well, then stick to it, don’t waste time and efforts on other lines and products that are simply mediocre. Focus on excelling in your specialty.
At the end of the day, it’s quality that will create a solid reputation and win over your customers leading to increased sales through referrals.
Conclusion
Depending on your business and industry, there are so many expenses that you need to budget to ensure your business doesn’t end up failing. And, budgeting is no easy feat but, if you take the time to sit back and calculate what you really need to spend – you’ll find your expenses reducing drastically.
So, what are you waiting for?
Inbal Axelrod is the co-founder and CMO at MyRouteOnline, a multiple stop route planner that helps make our world greener. Individuals visiting multiple locations can plan their routes online, optimize their route, and spend less fuel and time on the road. This means fewer greenhouse gas emissions, a reduced carbon footprint, and better air quality. Inbal can be reached at [email protected].