Running a business costs, we all know that
From paying wages and rent to dealing with miscellaneous expenses, it’s not uncommon for entrepreneurs to cover these costs out of pocket.
No matter your profit margin, it’s important to remain calculated and analytical when dealing with business expenses.
Even seemingly minuscule inefficiencies can accumulate over time, resulting in hundreds—if not thousands—wasted.
We’ll explore some techniques and strategies you can use to keep your finances healthy while running a business.
1) Minimize Your Overhead Costs
The first step to ensuring you don’t rely on personal expenses is by minimizing your daily overhead costs.
Overhead costs are the expenses that come with keeping the business running, such as rent and utilities.
These costs can be fixed, such as rent or loan repayments, or variable, depending on the volume of production.
One way to reduce these costs is by finding alternative and more cost-effective solutions.
For example, if your business isn’t maximizing its office space, consider renting a smaller building or sharing an office with another company.
If you have an expensive monthly phone plan, consider getting a cheaper phone plan like a 1300 number.
Once you know how much they cost, these plans can help set up professional communication channels between you and your customers that can last your entire business’s lifetime.
By finding more cost-effective solutions, you’ll reduce the chance that you’ll need to rely on personal finances to cover your business costs.
2) Negotiate And Vet Suppliers
Remember, your business isn’t the only one trying to make a profit—suppliers are, too.
If they’re not the only competitor in town, they may be more willing to negotiate on price to close the deal.
Therefore, whenever possible, it’s in your best interest to negotiate discounts or other special offers with suppliers.
You may have to purchase in bulk or commit to a long-term contract, but scouring around to find the best deal for your business can save you a ton of money.
Additionally, it’s important to vet your suppliers carefully before signing any contracts.
Ask for references from other clients, and always read the fine print to ensure you’re getting what you expect.
After all, you want your clients to be satisfied as well—and handing them flimsy, low-quality goods is sure to backfire.
3) Automate Your Business Processes
Automating your business not only saves you and your team the effort of manually taxing labour, but it can also benefit businesses by increasing performance, reducing inaccuracies, and improving employee availability.
For instance, using accounting software to track your finances rather than relying on paper records can help you produce faster and more accurate reports.
Similarly, automating time management software like calendars and task lists can give your employees more time to focus on technical work rather than time-consuming, clerical tasks.
4) Review Your Expenses Regularly
Your historic costs are one of the largest indicators of your future spending.
Reviewing your expenses regularly, whether monthly or quarterly, can help you catch any unnecessary or excess spending.
You can also use this data to see and filter where your money is going, whether your business is profitable or not, and evaluate your monthly subscriptions.
If you have even just a tiny inkling that your business isn’t performing up to par, you can validate your concerns through these financial statements.
5) Consider Outsourcing When Possible
If you’re truly struggling to cover certain business costs out of pocket, consider outsourcing tasks that are outside your area of expertise.
For example, if you’re a web development company, you may want to outsource your bookkeeping or marketing to other businesses.
If you run a physical retail shop, you can outsource social media management to skilled workers on Upwork or Fiverr.
6) Consider Going Digital
Let’s face it, a brick-and-mortar store comes with a lot of upfront and overhead costs.
If your business’s location is in a low-traffic area, you’d just be sucking your pockets dry on rent and storage space.
Instead, try going digital.
Planting a digital footprint through social media not only allows you to reach your local community better, but it can also make it easier to scale globally too.
An online store doesn’t require much to set up a product; a domain name, and a website hosting platform is all you need to start selling online.
With US Ecommerce sales forecasted to cross $1 trillion in 2022 alone, not having a digital business is like leaving money on the ground.
Ecommerce isn’t going anywhere, so there’s no better time to set up an online presence than today.
7) Don’t Underestimate Planning
Finally, the best way to ensure you don’t rely on your finances to cover business costs is by creating a proper business plan.
Creating a business budget and projecting your spending for the next few months can help you anticipate any unexpected expenses or fluctuations in sales.
Additionally, setting clear financial goals and regularly reviewing your progress can help you stay on track and avoid any major setbacks over the long term.
With a bit of planning and discipline, you can keep your business costs under control and avoid dipping into your personal finances.