When you are a business owner, your costs and expenses are understandably one of your greatest concerns. Obviously, you would want to keep your costs down and establish some form of control over your expenses. Doing this in an effective way can help you earn more profit, of course, but it also allows you to become a better business manager. So how can you effectively reduce and control your business’ costs? Here’s some expert advice which can definitely help you out.
There are two main types of expenses which you have to deal with as a business: fixed costs and variable costs. Variable expenses will change depending on the amount or number you supply or sell. These variable expenses include business stock, costs for delivery, costs for packaging, costs for postage, and more.
Your fixed expenses, on the other hand, will remain the same regardless of your profit or sales. These would include your rent, your fees for accountants and other specialists, your utility bills, your bank fees and charges, and more.
First things first
Your first task is to write down each and every expense you have and separate them into variable expenses or fixed expenses. By doing this, you can realistically determine how much you spend every day, every week, and every month, and what these expenses are.
Tackling variable expenses
Start with your variable expenses, as these are easier to reduce and change compared to fixed expenses. Think about what expenses you can reduce or even eliminate altogether. Next, consider expenses which can be re-negotiated or re-bartered. Think of your options as well. Is there any variable expense which you can get on a discount, especially if you purchase in bulk? And, if you have suppliers and they are not offering a discount, it’s simple: ask for one. You may be pleasantly surprised. Other tips for saving on your variable expenses include sending out your invoices via email rather than post, or using re-usable bags for items which are non-essential to reduce your packaging expenses.
Tackling fixed expenses
Whilst it may take a bit more time to reduce your fixed expenses, it can be done – and it’s worth it in the end. For instance, you may be able to save on your rental fee by asking your landlord for a rent holiday or a reduction on the rent. You should also take a look around for less expensive utilities, such as gas and electricity. Arrange a monthly payment with your accountant so they can charge you a fixed monthly fee (which is often lower).
By doing the above, you could go a long way in reducing both your variable and fixed expenses, as confirmed by the central London accountants from GSM & Co.
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