Whether you own a construction business or a pizza shop, part of your duties as an entrepreneur involves dealing with finances. (Even though most of us didn't start our own companies just for the simple pleasure of performing cash-flow analysis or expense management, it is part of the deal, nonetheless.)
Running a business incurs expenses, and money management is a vital part of staying open for business. Fortunately, there are some basic strategies that can help you keep costs under control.
1. Review expenses regularly.
If you only take one money-management tip from this article, make it this one.
I know you have lots of demands on your time, and the thought of adding even one more thing to your to-do list may seem impossible. But unless you're paying a pro for expert cash-flow analysis, you need to set aside some time to review your expenses.
And what I mean by “review" is this: Once a year, I sit down and examine every bill I pay—annual subscriptions, monthly fees, vendors, credit cards, every expense—by category.
I'm looking for a variety of things:
- I ask myself if each expense is necessary.
- I do some research to make sure I'm getting the best rate or deal that's available.
- I see if there are expense categories that are out of control or out of line with my ROI.
Is this my favorite day of the year? Nope. Do I always find some way to trim expenses? Yup.
Curbing impulse purchases can help reduce spending. When your purchases are carefully considered, they're more likely to be things your company really needs.
2. Make 'em count.
You gotta pay bills. You're gonna have expenses. The upside? Paying those bills with a business card that can earn you valuable rewards.
Whether you rack up airline miles or accumulate cash back, consider making a rewards business charge or credit card a part of your money management plans. Shop around for the best deal.
3. Hire and train more carefully.
When we think of expense management and cash-flow analysis, it's easy to forget about the biggest expense category for most companies: payroll. Lousy hiring decisions are incredibly costly, both in terms of wasted wages and in terms of the damage the wrong hire can do to your brand.
Some people rely on objective assessments and analytics. Others keep a running list of people who might someday be a good fit for the company. Whatever your hiring practices, make your decisions carefully, refuse to be rushed, and make sure you invest the time it takes to properly welcome and hire your staff.
4. Play the waiting game.
One of the simplest strategies I've ever found for expense management is to simply defer decisions. Just wait a day when you're considering a purchase. It sounds elementary, but it works!
Curbing impulse purchases can help reduce spending. When your purchases are carefully considered, they're more likely to be things your company really needs. Retail therapy can boost your mood, but it's wise to confine frivolous purchases to your personal world, rather than splurging on new desk chairs for the entire office without really thinking the purchase through.
So when you see something you want, wait a day. If the purchase still seems worthwhile in the morning, you know your money management is based on more than just a fleeting impulse.
5. Go paperless.
Here's a win-win. Paper costs money. Printers cost money. Ink costs a LOT of money.
Sure, there are times when you absolutely need a hard copy of something, but we all use more paper than we really need. You may find you and your staff benefit from having apps that replace pen and paper, like for to-do lists and calendar coordination.
With just a little effort, we can all reduce the paper we waste and run paperless offices. Not only does it help save money, it also helps with reducing our environmental impact.
You don't have to stop with paper. What other expenses can you trim by eliminating redundancies or unnecessary expenditures? Do you need a desktop computer if you have a laptop? Must you have a phone on your desk? Going paperless is just the start of better expense management.
Cash-flow analysis may not be the sexiest part of your job, but wow, is it important! Money management doesn't have to be a mystery. Your expenses don't have to rule you.
Read more articles on account management.
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