For a small business or startup to become profitable before its funding starts to dry out, it’s important for an entrepreneur to keep a strong hold on day-to-day expenses and administrative costs right from the start. If your small business expenditure has been spiraling out of control, as an entrepreneur you may have some tricks up your sleeve to nail the problem in the bud; however, if you’re looking for a little inspiration to better manage your cash, here are some tips.
Keep a budget and adhere to it no matter what
Small business owners need to be prudent about allocating funds to each cost head so that they won’t run out of cash when they need it most. Your employees need to be remunerated on time, bills need to be paid, and the business needs to function optimally, all of which needs one thing—efficient money management.
To be good at managing your cash flow, the first step is to create a budget and follow it on a daily, weekly and monthly basis. Review your cash inflow and outflow closely—every day if needed—so that you know where you stand in terms of available cash and outstanding payments every day of the month.
Even if you have delegated the job to an accounting professional, seek regular updates on operational expenses to know if things are on track.
Cut wasteful operational costs
Do your employees really need so many printers on a single floor? Can your pantry do without the expensive cookies and switch to a healthier option instead? Can disposable cups be replaced with people’s own glasses and mugs? Take a hard look at all your operational and utility costs, from how hardware is used to what causes your electricity bills to be so high. Be personally involved and you will find plenty of ways to curtail everyday expenses which till now seemed unavoidable and uncontrollable.
If bringing down your printing costs sounds appealing, you must check this page out to know more about how you can identify inefficiencies in your current printing environment and optimize your print spend to achieve cost savings as well as improve employee productivity.
Keep your marketing expenditure low
From free guest posting sites to social media marketing, there are several ways to bring down your digital marketing expenditure without hurting your business. Particularly when you’re starting out, it does not make sense to invest heavily in conventional and digital advertisement campaigns rather, make it a viable mix of free and paid internet marketing tools until you’ve reached a point where you can spend big bucks on marketing without second thought.
Manage your inventory
The key here is to avoid understocking as well as overstocking. Curtail wasteful expenditure by gaining better control of your inventory processes. Set up a robust inventory management system that minimizes situations where you’re either stuck with excess inventory or struggling with frequent stock-outs. Inventory eats up a big chunk of your regular cash flow, so managing it well is not a choice but a necessity if you don’t want to be dealing with dead cash sitting on shelves, waiting to be shipped.
Additionally, while taking stock of your inventory system, look at shipping costs billed by your current vendor. Is there scope to change your shipping partner for better rates? Will it be feasible to switch to a smaller courier company rather than an established one? Consider what all you can do to have a more efficient inventory system with minimum disruption to order fulfillment.
Review your organizational structure
Whether you’re a one-person army or a team running a small business, what you pay yourself and others forms a big chunk of your overhead costs. Review how your business is structured and whether salaries and associated perks are in line with the current scale of your business. Consider if you can reduce your own take-home income to get the business through a temporary low phase.
Also consider taking on multiple roles during the initial phase of your startup journey and outsource specialized tasks to freelancers instead of hiring full-time employees you can’t afford.
Once you and your core team have handled different roles within a budding organization, you will have greater clarity on what type of people to hire and what skill sets to look for when interviewing your future managers. Lastly, find other ways to cut costs than curtailing the remuneration of your workforce. Be a smart money manager and you won’t need to resort to such measures.
