I wanted to title this “reducing your business expenses”, but it’s not always about reducing.
Expenses are a reality of running any business. Not only are they inevitable, they are a vital part of investing in growth.
You often see this in the corporate world; times get tough, cash flow gets lean, and the first thing they cut is training, development and HR. But if you aren’t supporting your team, and enabling them to perform at their best, then how do you expect to make more money in the next month?! (End mini rant)
Back to the original point…
This isn’t always about reducing your expenses, but it is important to keep an eye on them, to work out what you are spending, where it is going, and if it is really serving you. (You can apply the same logic to your personal expenditure too)
Because a business is only profitable if you are making more than you are spending, simple as that.
So, here are 6 things you can do to control your expenses, and increase your profit margin.
*Disclaimer* before we go any further, this isn’t financial advice, as such. I’m simply encouraging you to review your personal situation, so that you can be more profitable in the future. Make sure you go and talk to your accountant and/or financial planner for advice specific to your business.
Make a list of your current expenses
Do this properly! It might be tedious, but it is oh so worthwhile.
Go through all of your statements for your accounts, cards, PayPal etc… and make a list of all of the expenses you are currently paying.
Make sure you go back a full 12 months, to find any of those annual renewals for software or services.
Review the need
Now, ask yourself honestly, for each and every one of those expenses
- Are you actually using it?
- Do you need it?
- Will you use it in the future? (Or is that just hope)
A gym membership is the perfect personal example of this. If you’re paying a monthly fee, but never going, then it’s a waste. Keeping it because you think you should go isn’t serving anyone. Get up and go today (or tomorrow if it is too late today)… if you’re not willing to go in the next 48 hours, then you may as well cancel it, because you’ll put it off forever.
Look at your software and subscriptions the same way. Are you actually using them? Or are you just paying for things which you think you should be using, you know is good for you, but you never get around to doing.
If this is the case, either start using it today (or tomorrow) or unsubscribe. You can always sign up again in the future if you get to a point where you are ready to start using it.
Condense where possible
Are you paying for 3 different types of planning software, or several CRMs from when you were trying things out?
Are you paying for several different image platforms (when you keep going back to your favourite anyway)?
Are you paying for 5 different types of planners, or a million notebooks? (No judgement here, I’m a stationery fiend, but I have starting limiting myself to just one planner)
If things are serving a clear, separate function, and you use them regularly, that’s fine.
But if it’s a double up that you don’t really need, cancel that! The sooner, the better
Negotiate your existing rates
Sometimes there is wiggle room in a contract.
If you go to your bank, electrical company, phone company etc and ask for a better rate, there is often one available.
Or if you mention that you want to leave them to use a better service, they will often negotiate.
When reviewing your business expenses, look for companies who may have a better rate on offer, and switch if needed. You could start by looking for a business insurer who offers the same amount of cover for a lower rate.
Or ask your existing supplier if they are willing to re-negotiate.
You could start with your current business bank and see if they offer new customers better transaction rates or lower fees.
Analyse future purchases
This is a big one! And the same logic applies to your personal life too… de-cluttering is great, but if you continue to buy lots of new stuff, you will be in exactly the same position as you used to be.
Sure, that 24 hour AppSumo deal looks great, but do you really need it? Will you really use it?
And that latest bit of software that everyone is raving about might sound awesome, but is your current software serving the same purpose, and doing all you need?
Remember, every purchase you make being taken directly from your profit.
Invest well
That being said…. when you do spend, spend well.
Invest in systems, processes and software that make your business faster, more efficient and provide a better customer experience.
Invest in your own development, and grow your ability as a business owner.
Invest in technology that serves you and works well (rather than being constantly frustrated at an old laptop that lags and freezes)
Invest in a team and outsource projects to make the best use of your time. Paying good money for a web developer, graphic designer, VA and other services to help you along the way is a great choice (as long as they are working well for you and you are a good fit)
These expenses are important. They help you grow. They are valuable to you and your business.
Make good choices with your spending.
What’s your point of view?
What are your current expenses like? Are they all necessary, or could you be putting that hard earned profit back into your own pocket.