Small-business owners care about their company's finances, of course. The issue is that many simply don't have time to review and reconcile their receipts, income and bank statements every month. And if those things are off the table, then variance reporting and quarterly projections are, too. The trouble with small-business owners' lack of business budgeting isn't just that they risk misreporting their income and expenditures. Without a regular look at the company's books, small-business owners can be bankrupted by ballooning expenses and wasteful processes.
But if you still struggle to find the time to check your business budget, the following signs should be a wake-up call.
1. Payroll is nickel-and-diming you to death.
Labor costs can be the single biggest expense small businesses face. Although cutting workers' benefits or wages is technically an option, it's not a sensible one if you want to stay in business.
Instead of skimping on compensation, consider the peripheral costs that come with payroll. Payment solutions typically charge a percentage of the total in fees, which can be hundreds of dollars per month. If you have just a few employees, you can use a payroll calculator to do it yourself. If your team is much larger, your time cost and chance of making mistakes aren't worth it. Instead, look for a provider that will do it for a low base rate, plus a per-employee fee.
2. Your customer service team is constantly crunched.
Spending more than 10 percent of revenue on customer service is a mark only companies with the most complex of products should cross. If you find yourself hiring customer service representatives left and right, consider your support channels. If you don't have a website, start there. If you already have a web contact form or email address posted online, invest in a SMB-focused help-desk software, which can automatically resolve some of your customers' questions. If the chatbot can't handle it, your team can then respond through Intercom's live chat.
3. Your internet and utility bills are out of control.
Internet service rates vary enormously by provider, location, and download speed. But if your small business is paying even $100 per month, it's worth shopping around. Don't limit your search to different providers or speed options; think about transmission medium as well. Cable and fiber internet can be very different compared to satellite, for instance.
4. You're replacing a company car.
Although some small businesses, such as airport shuttle services, can't do without fleet vehicles, there's a reason they're becoming a rarity at others: Some estimates place pool cars at a nearly-$50-per-mile cost.
Labor costs can be the single biggest expense small businesses face. Although cutting workers' benefits or wages is technically an option, it's not a sensible one if you want to stay in business.
When it comes time to replace a company car, don't default to the fleet model. Alternative car-sharing services can enable businesses to rent cars at much lower fees; most start with a base mileage—such as 180 miles—and then only charge a per-hour fee after that mileage number is hit. Some rental companies can also offer businesses vehicles beyond standard cars: utility vehicles, from parcel vans to flatbed trucks, can be rented for a daily fee. That can lead to long-term savings that ownership can't offer.
5. You're still sending faxes.
Not only do most small businesses still use fax, but recent concerns about data breaches have made the technology more popular than expected. To prevent data from getting in the wrong hands without adding expense, many companies have reverted to old-school faxes.
You might not break the bank with a fax or two, but using the system can add up over the span of a year. If a given attachment won't fit in an email, look at options like Dropbox or Google Drive. If cost and security are a concern, try ProtonMail or Tutanota, encrypted email services that offer free options.
You don't need an enterprise-quality accountant to run a small business, but you do need a solid handle on your business budget. Look it over every month if you can, but at least keep vendors from picking it apart like a pack of vultures. When the lean times come—and they always do—you'll be glad you kept the buzzards at bay.
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