There’s always room for improvement. The reality is successful businesses are always on the lookout for ways to reduce costs and reinvest more money. That’s why as a small business owner, you need to know where and how your money is being spent. In some instances, you may find that restructuring your budget is necessary to help your business reach its goals. If you’ve come to that realization, then consider these six simple ways to revamp your small business budget.
1. Keep Budgeting Flexible
The first step is ensuring that your budget is flexible. Rigid budgets may not be useful for a small business. The reason that’s the case is because things are bound to change as the years go by, and it’s a good idea to factor in the anticipated changes and how they’ll possibly affect your business. Over-relying on the best guess that worked several months ago may lead to erroneous and costly decisions. Also, holding your staff to metrics that are based on outdated information can be frustrating and counterproductive. Flexible budgets will enable better results in your small business.
2. Review Financial History Reports
Financial history reports are an excellent source of information concerning your costs. Take time to go through your accounting system. Ideally, it should be well equipped with historical information about your business expenditures. Review how you’ve been spending your money. Check both monthly and yearly costs to gain a good grasp of your business expenditures.
You might discover that you’ve been focusing on sectors that have not been bringing in expected returns. That will give you the information you need to know where to cut costs and where to pump in more cash.
3. Keep Track Of Government Taxes And Incentives
You can also keep an eye open for the latest tax costs and government incentives that can save your business some money. For example, the Work Opportunity Tax Credit (WOTC) offers a tax credit for employers who hire and retain people from targeted groups that have continually faced significant barriers to access employment. The tax credit may range from $1,200 to roughly $10,000, depending on the worker hired.
4. Use Technology
The technological world is always active with new inventions hitting the market as frequently as possible, and some play a huge role in cutting down on business costs. For example, a mobile-friendly website creates easy access to your business products. A business mobile application that’s integrated with social media can offer you free advertising platforms courtesy of your clients who click to share their experience. Something like Skype puts you face-to-face with clients and could potentially cut travel costs to attend business meetings. There are many technological tools at your disposal that you could use to help you cut costs.
5. Examine Your Marketing Strategy
Marketing is one of the areas both small and large businesses heavily invest in. Examine your marketing to learn exactly what’s working and bringing you clients. Equally important is to identify what seems not to work for your business. Keep what works and let go of what doesn’t. This way you eliminate ineffective and even potentially business-stifling marketing efforts and you cut the costs associated with it.
6. Use Pooling Power
Pooling power could help you gain leverage for better prices. How? First, you need to seek like-minded companies that share a supplier. Then, you have to pool your resources and create a combined purchasing power that will help you all access some savings. From there, with an agreed purchasing price, you collectively tell the supplier that you’ll buy at a certain amount and for a pre-set duration. Such an offer has been known to work largely because it provides not only large revenues for the supplier, but also a consistent client base for a set duration.
Any of these six ideas could effectively reshape your business’ budget. With that said, there’s no quick fix and every business is unique. The most important thing you need to do is closely examine your financial situation. If over a period of time you discover areas that require improvements, you need to act.
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Author: Eric L. Mitchell