Running a business costs money. “You gotta spend money to make money,” the old adage goes. That’s why our businesses have operating expenses and budgets. It’s the money that keeps the ship running, and makes sure that everyone gets paid.
But maintaining control of your business operating expenses can be easier said than done. Business costs, just like our personal costs, can creep up over time, and we often claim expenses as ‘growth’ or ‘marketing’, even when they don’t quite justify it.
You don’t have to wait until you NEED to cut costs to review your operating expenses. In fact, it’s good business practice to review your spending annually, if not quarterly. You should understand what all your business expenses are at all times in your business.
How to Track Business Expenses
Here’s a quick primer on how to audit your businesses operating expenses.
Fees are everywhere and they eat away at your bottom line. Credit card processing fees, invoice service fees, fees to mail product. Where can you reduce fees? Are you paying more than the market rate on certain services? Comparison shop to make sure that fees aren’t cutting into your business more than they have to.
We need services to run our business. From paying an email list provider so that you can send out a monthly newsletter, to paying for a domain name, services are essential to staying up and running.
But what’s the line between ‘essential’ and ‘nice to have’? This is a question best answered before you need to cut any costs from your businesses operating expenses. Understanding the difference between what keeps you up and running and what makes life easier takes the emotion out of the decision. If there ever is a time that you need to cut expenses, you’ll be able to refer back to this.
Asses Your Stock Purchasing
Do you have a tendency to overbuy because ‘you’ll use it eventually’? Assess the logic behind your purchasing decisions and why you operate the way you do. Systematize your stock purchases so that you stay on track for what your business demands.
Understand Your Businesses Operating Expenses
Doing an audit of your businesses operating expenses regularly can help you keep on top of your expenses. It will also give you a clear idea of how and why your business operates as it does. Not all businesses are alike, so don’t hold yourself to someone else’s standards. Dig in deep and understand every line of your expenses so that you have complete control over every penny that comes in and goes out of your business.
Republished by permission. Original here.