As a small business owner, controlling expenses is critical to your company’s survival. Staying within the limitations of your monthly business budget isn’t always easy, especially when unexpected expenses arise. However, financial issues for businesses are often the result of a lack of monitoring or the small but steady expenditures that build over time.
Here are eight ways to get a better handle on your basic business spending and help you and your employees stick to a monthly budget.
1 – Track Expenses
Knowing where your money is going is critical. Not keeping track of expenses is arguably the most common way that small businesses end up wasting money and potentially the most costly.
Establish a simple expense reporting and accounting process for every department. Monitor your budget as frequently as you can, but no less than once a month. The more attention you give to your accounts, the easier it is to spot discrepancies and overspending. You can then make adjustments to your expense plan to better meet the needs of your business.
2 – Budget Time Better
Managing time effectively is as important to business growth as managing your money. If you and your team are constantly scrambling, your budget is bound to take a beating, from paying overtime and late fees to missing deadlines and failing to cut the best possible deals. Poor time management also results in fewer hours to keep track of your budget, so focus on practices and processes that will increase efficiency, improve productivity, and help employees manage their time wisely.
3 – Avoid Late Fees
Make sure to pay bills on time to eliminate expensive late charges. Many small business owners simply do not know or keep track of their payment due dates, whether they are for credit cards, loans, or rent. If this is an issue, change all of the due dates to a similar day of the month and modify your accounting and payable routines accordingly.
4 – Beef Up Your Haggling Skills
Small business owners are often uncomfortable at the negotiating table, but failing to request a better deal from vendors or service providers is a missed opportunity. Make negotiating part of your day-to-day business routine and encourage your employees to do the same. Aim to save at least 10 percent on the offered price, and find additional budget savings by re-negotiating existing agreements wherever possible.
5 – Banish Supply Waste
From paper cups and printer cartridges to pens and paper towels, the supplies your office uses on a daily basis represent a serious financial investment. Investigate more economical and eco-friendly solutions. Something as simple as storing your supplies in one central location instead of various areas of your workplace will help you keep better track of inventory levels and avoid over-ordering or outages that lead to emergency purchases at retail prices.
6 – Perk Up Employee Perks
Employee perks are a great way to improve morale and build camaraderie. However, if perks like Monday morning bagels or gym memberships are going unused, the costs add up to a drain on your business budget. If this is the case, evaluate your perks, cut those that are going to waste, and replace them with things your team will use.
7 – Go Easy on Tech Gear
Avoid purchasing or upgrading technology tools unless your business really needs them. While you certainly can’t afford to be behind the curve, frequent or unnecessary expenditures on cell phones, computer monitors, or the latest tech gadgets can decimate your business budget. Commit to purchasing only what you need when you need it, and budget for routine hardware and software upgrades ahead of time.
8 – Ask for Employee Input
Make it a point to educate your employees about the impact of expenses on your business’s success. Ask them for ideas on how to cut costs, or consider creating incentives like contests that will inspire them to lower unnecessary spending. Reward the winners and reinvest the results of cost-cutting efforts into your business and your staff.
Paying attention to these details may be tedious, but it is essential to maintaining the financial health of your business. Summit Financial Resources knows that even the most disciplined business owner can experience a temporary budget shortfall. Whether you need working capital to purchase new equipment, expand into new products, or invest in more efficient processes, we are here to help you achieve your goals.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.