One of the biggest losses of money for many businesses is when money slips through the cracks. This can happen in many ways, by not watching expenses, or not fully charging all the expenses you should be passing on, other cracks may be numerous, and barely noticeable. However almost every business is losing money on a daily basis without really being fully aware of it. There are a number of ways that you can work to avoid some of these losses or to improve your profitability through better management of expenses.
LOOK FOR SAVINGS – This is potentially the biggest area that you can look to improve. Especially if your business has been running for some time then there are potentially any number of area’s that are just running on auto pilot. As such these area’s could be candidates to save some money. These can include things like Telecommunications, Internet, Office Supplies, Insurance, Leases, Contractors, and Staff. All of these area’s are things that unless managed to some extent will not show savings potentials themselves.
- Telephone – This is an area that you can quite quickly and easily end up spending more then you need to without even realizing. The longer you have been with the one provider the more chance that you could get a better deal elsewhere. This is not to say that you should not also look for a better deal from your current provider, but it is somewhere that money can easily be lost.
- Internet Access – Again just like your telephone, your internet access could also be costing you more then it needs to. There are new technologies and plans coming out from different providers all the time. It is just a matter of being aware of what is available for your needs.
- Office Supplies – There are many different ways that you can get your office suppliers, and while some the small cost saving compared to the frequency that you buy them is minimal. However it is more then things you buy often that cost the little bit more you need to watch. Things like Ink and Toner, paper, and the accessories that you may need, as in filing, desk accessories and the likes.
- Insurance – Insurance is not an easy area to save, however it is possible. It will generally come down to being aware of what you need to cover and what may no longer need to be covered. For example your warehouse may hold varying amount of stock depending upon the time of year, adjusting insurance cover inline with this could be a benefit. Additionally depending upon many factors their may be other ways to work on improving your insurance premium, through either checking with other companies, or even just asking the company you are already with.
- Building Lease – Again just like insurance this may also not be an easy area to save money on. However it is possible, if you stay aware of where you are at. Businesses change so quickly sometimes that it is easy to over do things. Getting a space that is geared for growth, and not really needing all the space, can be a drain on finances. The same if you are forcing to many people to work in a space to small, and it is causing lost time in limited access to facilities or the like.
- Contractors and Staff – While you may need staff to run your business, and contractors to fill the needs your staff can not. Being aware of what these people are actually providing for your business is essential. Ensuring staff know their role within the business and as such are able to fulfill that role can often save much of the lost time and productivity in trying to work out who should do what. Also when it comes to contractors, it is good to be sure that you know exactly what you want done and can express this when getting quotes. Ensure quotes cover what you want done to try and avoid unexpected costs.
My final thought on looking for savings though is not always the straight forward solution of how do i save actual dollars. Quite often it may come down to a little more then looking for the money savings, but more looking for savings in other area’s as well. Like Where can you save time for yourself or your staff, more space to work in better processes for work flow or better defined roles. Likewise, will spending a little more money today to buy better equipment or to get more space, actually provide increase savings or improved work flow and actually provide additional revenue down the track.
BILLING – One area that is easy to lose revenue that does not need to be lost, is by not correctly or accurately invoicing customers. It is easy for small charges to slip through here and there. A fee not charged to one client, or maybe a mistake in hours billed. These may often be small things, however over the long term they do add up. It can just be small amounts that wouldn’t be noticed either way, or it can be at a point where it is hundreds of dollars per week.
Billing mistakes, can add up to quite a lot in lost revenue, and more importantly profit. However they can be occurring the other way where clients are over charged. Where mistakes are happening either way you should show concern, as when clients are being under billed you lose revenue and profit. But when the clients are being over charged there is much more likely hood that you could lose clients. Over charging does look good on the bottom line profit and loss, however it is not really an ethical practice and is more likely to cause your business harm then any good.
BOTTOM LINE – Saving money in your business is about building a better and strong business. Something that will last and provide more benefits. However in doing this it should be important to realize that you don’t want to affect two things in particular. The first is the level of customer service, this is something that you should always maintain, as a lack of customer service will almost inevitably lead to a lack of customers. The second thing is you should try to avoid depriving staff of the tools they need to make your business great. While saving money is good if the staff do not have what they need to keep the business going or growing then you are going to see the revenue and profits go the same way as your savings.
One of the best ways to save in some area’s of your business is to consider the idea of No Fixed Office. Especially for small businesses, that may run as a single person (you) or with only a couple of employee’s, having no fixed office can save a lot of costs, such as leases for one. However this should be considered based on your actual circumstances. You can find some more i have written on the topic at www.nofixedoffice.com.