At least once a year every business owner should review the cost of running their business. Whilst you might spend time finding the best and most cost effective supplier for the goods that you sell or for the materials that are used to provide your service, do you consider the other costs that your business incurs? Costs such as insurance, telephone & broadband, stationery, subscriptions and marketing. Are you aware of these overhead costs or do you just accept they are what they are?
Businesses are all about increasing turnover to increase profitability but reducing costs will also increase profitability.
This August, while business is a little quieter for most types of business, I challenge you to take a look at what you are spending. A really good look. Compare the costs with last year and the previous year. Understand the changes and don’t just accept that prices go up. Look at each invoice and know what you are being charged for and consider whether the cost is necessary or whether it can be reduced.
Over the next month take at look at these six expenses in your business. It will probably be an hour well spent.
Telephone, mobile & broadband – Ensure you understand all the charges on your bills and give the providers a call to make sure you are on the best tariff for your business. Be aware that BT have been known to add additional charges for services like marketing or usage over the tariff you are on.
Insurance – it may not be time to renew but it is still worth checking out how your insurance costs compare year on year and make a diary note to research some other options when it comes near to renewal time. Do you have enough cover or are you paying for cover on something you no longer have?
Stationery – do you know what stationery is being purchased by your staff or yourself? Are you surprised at how much has been spent? Is it time to reduce this cost and use less? To save electronic copies rather than print?
Bank charges – are you on the best tariff for the transactions you do? Banks have different tariffs. Do you get unauthorised overdraft charges or bounced payment charges? Add up how much it has cost you in the last 6 months – it could be significant. Planning for your income and your expenses will help you to avoid these charges and increase your profit.
Credit card interest – if you are paying interest on your credit card because you are only paying the minimum see how much this is costing you each year. Make a plan to pay off more each month and see how much more benefit that money will be to the business rather than the credit card company.
Electric & Gas – when was the last time you checked the invoices from your providers to see what rate you are paying? Most providers offer a fixed price for a contract term of 1, 2 or 3 years. If you are on the variable rate you may be paying more than you need to. Get some quotes, although beware, the cheapest is not always the best. Some providers are difficult to deal with, take a large monthly amount until they have seen a year’s worth of use, rarely provide bills and are not easily contactable but some really are worth switching to.
Software – what are you paying for software each month? Now that most things are cloud based it is easy to sign up to use something and then never get around to it. If you aren’t using it, cancel it.
Direct Debits and Standing Orders – review the direct debits and standing orders going out of your bank account. Do you know what each one is for and how long it will last? Do you need it? Cancel those you don’t need.
I hope this challenge will help you find some money to save in your business. These costs are regular costs in your business and if you don’t need them or can find a way of reducing them you will increase your profitability. That is what every business owner strives for.
If you are not able to compare your costs year on year because your accounts are not accurate or up to date then maybe you need a bookkeeper to get you organised! Give our bookkeepers a call on 01722 341820 and they will help you to find the savings you could make in your business.