Review your expenses – and save your business money
Posted on 28th August 2024 at 14:24
Running a business will always mean incurring certain expenses or ‘spend’.
Whether you’re a large family business or a small fledgling startup, there will be costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit.
So, what can you do to reduce your spending? And what impact will this have on your overall margins, profits, and ability to fund the next stage of your business journey?
Getting proactive with your cost control
Cost control is all about getting in control of your expenses – and, where possible, aiming to reduce the level of costs and overheads that you incur as a company.
Why does this matter? Well, excessive spending eats into your cashflow, reduces your profit margins and stops you from achieving the profits that you’re capable of as a business. So if you can get proactive with your cost control, you can actually make your company far more financially productive – and that’s great for your overall business health.
So, how can you reduce spending and slim down your company expenses?
Here are some key ways to reduce expenses:
Reduce your overheads – These are the unavoidable costs of running your business, producing your products or supplying your services. If you have a brick-and-mortar premises, these overheads will include rental payments, utility bills and even the cost of paying your staff. Drill down into the numbers and see where there are opportunities to reduce these overhead costs. That could mean moving to smaller premises, or reducing the size of your team to reduce payroll expenditure.
Put limits on staff expenses – If your employees can claim expenses, or buy raw materials and equipment with the company’s money, these costs can soon start to rack up. It’s a good idea to have a spending limit, so each staff member can only spend up to an agreed amount. Having a clear expenses policy helps, as will training your staff in good cost control techniques. Specialist expenses card software allows you to quickly set spend limits, track expenses and pull your expenses data through to your cloud accounting platform for processing.
Look for cheaper suppliers – If you can reduce your supplier costs, this will go a long way toward bringing down your overall spending. If you’ve been with certain key suppliers for years, look around for new quotes, see current market prices and see if you can negotiate better deals. And if your old suppliers aren’t flexible enough, try swapping to newer, more eager suppliers willing to meet you in the middle on price.
Make your operations leaner – the bigger your operational costs are, the less margin you’ll make on your end products and services. One way to resolve this is to aim for a ‘lean approach’, paring back your staff, resources and operational complexity to the bare minimum. By making the business as lean as possible whilst still delivering the same output, you keep your revenue stable but reduce the spend level that’s eating into your cost of goods sold (COGS). The smaller your COGS, the more profit you make on each unit or sale – and that means better cashflow, more working capital and bigger profits.
Explore tax reliefs – Tax costs are unavoidable when running your business, but it’s worth exploring which tax reliefs, grants or other business benefits you may benefit from. For example, research and development (R&D) tax credits may be available to you to help cut your corporation tax expenses.
Talk to us about improving your cost control.
If you’d like to get in control of your expenses, we’d love to chat.
Call Rebecca on 01604 330220
Tagged as: Tax
Share this post: