As a business owner, one of your key drivers will be how you make more money.
One way to make more money in your business is to reduce costs. And I’m not talking about reducing everything; I’m talking about ways to eliminate waste.
So follow my video or read below, and we’ll explore more.
Cutting Costs
To have a successful business and make money, you need to ensure you are not wasting resources. So if you’ve got stuff you’re using that’s either low quality, low value, or producing nothing, these are the things you want to eliminate in your business immediately. Because once you cut this out of your business, you hopefully will not see any effect, but your profits will rise.
So, how often have you reviewed your expenses in your business to eliminate waste?
Separating Your Finances
Separating your personal and business finances is one way to make things clear. I know every small business owner will have some personal expenses that go through their accounts and will go into their Director’s Loan Account. And I also understand that you may pay for some business expenses personally that you then need to reclaim back for your business. But what you want to make sure that you’re not doing is that all your personal life is going into your business.
But what you want to make sure that you’re not doing is that all your personal life is going into your business. Now some businesses review their accounts annually, and if you don’t want to get to the year-end, look at your Director’s Loan Account and have a massive black hole. So, one way I believe that’s an easy win to fix this is to separate your personal and your business costs.
Bank Accounts
It’s really good practice in any business to have an overdraft in place. But an overdraft is in to dip in and dip out, not use it constantly. These overdrafts are very handy, but they’re also very expensive. So, if you’re consistently in your overdraft, you’re going to be attracting interest and bank charges that are going to be expensive.
So, one thing that I would consider as a business owner is if you’re in this situation, could you create this into a loan?
Could you get the loan at a cheaper interest rate, which you could pay off gradually, which could then keep you above your overdraft?
So, you’re not burning money in overdraft and interest costs where you can get it cheaper elsewhere.
Measuring your finances regularly
I know many business owners, even if they don’t do regular planning, will have exactly what they expect the business to run, or they may have a budget.
But budgets are all very well incurred, but who budgets accurately to the penny? So how regularly are you reviewing your accounts on your cloud accounting system or management accounts?
If you’re not sure what management accounts are, click the link here. I explained exactly what management accounts are and why they benefit you as a business.
But how often do you review the Budget to Actual, and how are you reviewing your data that’s to make sure you’re not burning money? So, a great frequency to review your management figures is monthly, but also bi-monthly or quarterly is also good. Just get into a habit of understanding and reviewing your accounts; the more you understand, the more you can cut rubbish, and the more rubbish you cut, the more profit you make.
How often do you regularly review your figures for your business?
Review your subscriptions
An easy win for expenses is to look at your regular standing orders and direct debits coming out of your account. Have you got software subscriptions? Have you got any type of subscription whatsoever that you’re not using now may have been great during the day; you may have used the products that may have been great, but now you’re not using them.
And so, I tend to find that if I’m looking for easy, quick wins with business owners, we review their direct debits and literally be brutal about it. Is this creating value? Is it not? Will it create value in the future if it’s not, and literally, if it’s not cut, cancel because you only want to be spending money on your business that you’re not continually using?
So how often do you review your direct debits to see what you’re not using in the future?
Missing Deadlines
There’s no real reason to miss deadlines unless there’s a one-off problem: you’ve got ample time to do your VAT return. If you’re doing it continually, you’re burning money, and there’s no reason why you can’t get your accounts done nine months after the year-end.
Again, if they’re late, it looks really rubbish from a credit perspective, and you’re also burning money. So where in your business are you not keeping to the deadlines? And where are you burning money where you don’t need to?
Spend money on maintenance
This one, I’m going to say, make sure you carry on spending: spend money on maintenance; if you’re not maintaining your products, or you’re not maintaining your machines, they are going to get faulty. If you cut down on maintenance, you’re going to have to replace them quicker. Who wants that?
So, have you got maintenance contracts in place for the things that are really key within your business?
Think before you spend
Many business owners out there fall into the trap of impulse buying. If you often make this mistake, you need to learn to be more cautious about it. Is it worth standing back and saying: Do I really need this? Can I sleep on it? Could I give myself three or four days, maybe a week? And do I still have that same passion there to invest in the next stage of my business?
If you’re a bit of a cautious type, ask yourself if you are being overly cautious.
I think that is key because this is where business owners can either starve investment, which would then hamper their business, or they’ll just be like spending way too much money than they should have had on something that’s nice and shiny but they can’t afford.
So are you investing in the right products in the right things at the right time to give your business every chance of success?
Spend money to save
I like a Chinese phrase: “Good, good, no cheap, cheap, cheap, no good!”
So, if you’re looking to buy a product, and you’re looking to go for cheaper, is that always the best investment, or is it sometimes better to buy quality, buy it once that lasts a longer time?
I get that not everything you buy the most expensive will be the best. But there will be certain things that will just provide better value.
Just an example of mine is toners; I bought them for a third of the price, and I was promised a long-lasting and good quality toner. However, we used it twice, and there was ink everywhere. And I learnt if I just pay the full price for a trusted brand, that will last me longer.
So when looking at things you’re buying in your business, are you buying quality, or are you buying cheap and potentially buying twice?
Investing in your business can help you save money in the longer term and help you make more money, but under-investing in your business creates a black hole for future revenues.
Make sure you are investing in your business, which allows it to thrive and make excellent returns in the future.
I hope you found this video interesting and there are some actions that you can take from it.
If there are any questions or anything you’d like a quick chat about, click my Calendly link below. I will take on board any questions you have and I promise there will be no pushy sales pitch.
