All small businesses are guilty of overspending in some respect. Whether it’s due to a careless attitude towards company credit cards or just a lack of financial nous and naivety makes no difference. Ultimately, there are money drains everywhere which you can target, fix, and make a significant difference to your business profits. Let’s take a look at some of the most common areas of small business overspending - and how to stop the waste.
General spending
The first step is to get a grip on your overall finances. Many small business owners decide to do their accounts themselves and don’t want to have the expense of hiring an accountant or bookkeeper. The trouble is, a financial expert can help you save a fortune. Not only can they help you reduce your tax exposure, but they can also show you precisely where you are spending money. The end result is a massive return on your investment, for a relatively small monthly outlay.
Costs of good and services
How much are you spending on raw materials, equipment, and services that help your business make sales? These direct costs are all responsible for a significant proportion of your business expenses and make up much of your cost per sale. It makes sense, then, to ensure you are getting the best deal possible on every service or product you are regularly buying. Consider hiring a buying or procurement specialist to help you build deeper relationships with suppliers and get better deals - take a look around for local procurement recruiters if you are struggling to find the right people. The result will be a lower cost of sale, meaning you can reduce your prices, get more customers, and start being more competitive in your industry.
Deliveries
If you are sending products to customers, make sure you are tracking delivery costs. When businesses start out, they often have to use standard delivery services, which can be expensive. However, as you get bigger and start supplying more customers, other services will become available to you - for far less money. It can have an enormous impact on your profits, so always be aware of your supply chain and don’t be afraid of making changes.
Insurance costs
It doesn’t take long for a business to start developing huge lists of insurance plans they are covered for: general liability, property, vehicle, health, employers insurance - there is no end to it. And because of the huge amount of paperwork involved, many business owners are slow to make any changes - even if it could save them a significant sum of money. But, with a little focus and a lot of shopping around, you will always find much better deals for your insurance. And if you’re tired of looking at your huge insurance expenses every month, then some shopping around can save you anything up to 20%.
As you can see, there are plenty of areas where a small business might be overspending. However, there are some simple solutions that you can put in place without too much time or hardship. Why not see what you can do to cut your small business costs?
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