Business Money Management

Business Money Management
Business Money Management

When you’re running a business, you’re on a tightrope. You’re constantly trying to balance your incoming revenues with your outgoing expenses. But all too often those costs grow and grow, and you end up losing money without really knowing why. (Image by Flickr)

Many of the costs businesses fact are static, meaning that they recur at regular intervals over time. Think things like commercial mortgages or utility bills.Other payments vary, depending on how many items you sell, like the cost of sourcing products from wholesalers. Cutting these costs can have an immediate impact on your bottom line because doing so increases the size of the gap between your incoming revenues and your outgoing expenditures. In effect, slashing costs is just as effective as increasing sales to boost profits. No wonder so many business people are obsessed with it.

The real question, however, is how to slash costs without hurting your business. You don’t want to cut costs so much that you start killing your revenue and your business starts to shrink. Take a look at these tips to reduce costs, but also keep your business healthy.

Control Cost Creep

Cost creep is one of the most annoying things in the whole world of business. It’s where the costs of doing business rise inexorably, and you don’t really have any idea why. One of the reasons for it is other companies increasing their prices to you at contract renewal, under the guise of “inflation.” Sometimes inflation does play a role, but most of the time companies will just try their luck and see whether you notice your premiums went up. Insurance companies and utility firms are particularly egregious when it comes to cost creep. Always fight for the best deal when it comes to renewing your contract with these enterprises.

Cost creep can also result from the actions of entrepreneurs. Many entrepreneurs think that they have to have every new piece of software for their business to manage clients, despite the fact that they only have a couple of new customers every week. As a result, they go out and buy the latest CRM and scheduling software, all in an attempt to control the deluge of interest in their product which simply isn’t there.

Annualize Recurring Costs

Let’s say that right now you’re paying a third party vendor to host their website. Often you’ll find that they have multiple price structures – one if you pay monthly, and another if you pay yearly. The upfront cost of paying yearly might be higher. Over the course of a year, you’ll pay a lot less than if you’d stuck with the monthly option. So here’s a tip: check all your recurring payments to see if there is a yearly payment option. If there is, then great: you just saved yourself a load of money and your business didn’t notice a thing.

Hire Virtual Assistants

There’s no point spending vast sums of money hiring people full time if you simply don’t need them. If you’re paying a secretary to reply to emails, but the job only takes a couple of hours. It might be worth outsourcing it instead. Hiring virtually means you only pay for the services that you actually use, a much more efficient way to use your business’s money.

Jacqueline Maddison
Jacqueline Maddison is the Founder and Editor-in-Chief of Beverly Hills Magazine. She believes in shining light on the best of the best in life. She welcomes you into the world of the rich and famous with the ultimate luxury lifestyle.
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