Many business owners and entrepreneurs feel that the goal of business is to expand quickly to make as much money as possible and the only way to do this is to spend, spend, spend. If there were a graveyard for businesses that died as a result of spending more than they ever made, however, it would probably be larger than all the graveyards for humans combined. On the other hand, businesses that are constantly slashing costs and cutting corners are the bane of most of their employees and if you cut costs by cutting the quality of your product, you also lose customers.
There is such a thing as smart spending, however, and that includes doing a cost/ benefit analysis of all spending. In other words, are your expenditures genuinely gaining you more than you are spending on them? Not all spending is good spending but it can also be costly to not spend on things that are important. Here are three great ways to slash business costs without sacrificing quality or your employee’s happiness.
1. Track expenditures
One of the first things almost any financial planner will tell people looking to get a handle on their finances is to simply write down everything they spend. Before you can make decisions about what is and isn’t most important to you, you have to have a clear picture of exactly where all of your money is going. Thanks to a wider variety of credit lines, it’s also easier than ever to spend more than you are earning.
What is true for individual financial management is also true for businesses. Many times, when people start writing down everything they spend, they suddenly realize they are spending $300 a month or more just on coffee or nearly $1,000 a month on Ubers. These expenses don’t seem that big when they are spending $5 here or $25 there, but when you add them up over the course of a month or year, they can seem outrageous.
Hopefully, you already have a bookkeeper or accountant keeping track of your expenditures, but often when people do have a bookkeeper or accountant handling their finances, they don’t take the time to really sit down and go over every one of their expenditures with a fine-tooth comb. Some of the biggest business expenses will be in the form of small reoccurring expenditures of $100 or less. Take some time to sit down with your monthly finances and figure out what is really important and where are you hemorrhaging money on things that just aren’t that important to you.
2. Get a handle on telecom
In the digital age, businesses can benefit greatly from having employees equipped with company cell phones and tablets. The problem is that while the hardware is a one-time expenditure, the data is not. Data consumption is rising at an almost astronomical rate, and so are the costs. While you may not have a problem with your employees using their cell phone or tablet to stream movies or play video games on their devices during off-work hours, the problem is, you are paying for the data they are using while doing so. Telecom cost management is crucial for managing business expenses and Wandera can help. Wandera can show you where data is being used, block certain sites from being accessed and help you set caps and limits on data usage.
3. Negotiate long-term versus month-to-month contracts
Negotiating with vendors is a great way to drive costs down by working out package plans. You may be currently using two vendors for items that one vendor can easily supply. By combining products or services, you can often get a discount. You can also often work out a yearly price at a discount for certain services you may currently be paying for month-to-month.