Increasing your profit margin is any business owner’s major goal, and there are many important steps to achieving this over time. From employing new and improved marketing tactics to out-pricing competitors, there are various manoeuvres in business that can help you to increase your market share and make more sales, and therefore more money.
However, one important strategy that is often ignored or forgotten is the simple act of reducing your existing business expenses. The way you handle your cash flow plays a crucial role in how easily you break even, and more often than not, business owners are spending more than necessary in certain areas.
Taking charge of your business finances with a good and affordable accounting service like YBL Accounting is the first and most important step. The next one is to reassess which expenses in your budget can be reduced or even eliminated entirely. Here are a few common expenses to look out for.
Rent
Purchasing a building or renting out a store or office space can be unnecessarily pricey, especially for a small business. If you’re just starting out, try to avoid these costs by running your business from a home office until you’re really on your feet. If this isn’t possible, try to look out for storefront or office space away from extremely busy areas which can be more expensive.
Staff
Naturally, any business needs a great team to operate like a well-oiled machine, but be wary of hiring too much staff in the early stages of your business venture. Unfortunately, you may need to take on a lot of the work yourself, but this will help you to raise your profits can get your business off the ground.
Make sure you hire only the employees that will play a crucial role in your business. Taking on less staff will also ensure that everyone within the business can be afforded the salary and wages they deserve – happy employees are an important part of any successful business.
Overheads
Just like you wouldn’t leave your bathroom lights on, or your stove burning all day long at home, try to have the same approach to your business. Overhead costs like electricity and gas can really build up and make a huge dent in your monthly expenses. Keeping a keen eye on what you’re using and reducing that energy can make a major impact.
Marketing
This is one area of a business where it might be a good idea to splurge a little, but this doesn’t mean that you should be spending unnecessarily. It’s important to get smart about your marketing and advertising tactics and leverage any cheap or free exposure you can get your hands on.
Online and social media marketing is a great way to approach this. Paid promotional ads on social media platforms are affordable and can have a really great and specific reach. More than this, making use of influencer marketing, ambassador programmes and referral programmes can boost your business massively for very little cost to you.
Supplies
This is obviously not an expense that can be cut, but it could potentially be negotiated. Bartering for your supplies is always a good idea – discuss with potential suppliers if bulk purchases could land you any form of discount. You should also be constantly shopping around and negotiating for better prices on any supplies you may need for your business.
Insurance
Once again, this is an important one. No business can afford to be completely uninsured. However, there are ways that you can reduce your insurance premiums – installing alarms or having some form of security on the premises can assist with this. You should also consider working with a broker to help you shop around for the best deal on offer.
Time
Perhaps not a tangible expense on your budget, but don’t forget that time is money. Working efficiently with your time and being productive with your allocated business hours can actually increase your profits. By achieving more in each day or week, you’re getting closer to all your business goals faster, financial or otherwise. Try to work with a schedule and avoid time-wasting tasks as far as possible (especially if you earn by the hour).
The Bottom Line
Cutting costs in your business is a sure-fire way to increase your overall earnings. Take the time to really look at your expenses and assess where you’re overspending and where you need not be spending at all. This can really help to free up some space in your budget for more important things or leave extra to put in your back pocket.
