It is important for every business owner to make a maximum profit, both through sales and by maintaining strict financial discipline within the company.
Implement sound practices from the start, and you will reap the benefits later. These seven tips on cost management will be beneficial for your small enterprise.
- Watch expenses from day one.
You might think that overspending during the first few months after opening your doors is forgivable, but discipline is needed right from the start. Spend money only on the necessary and always look for cheaper alternatives. Money saved now will reap rewards later.
- Don’t confuse business and personal expenses.
When getting ready for tax season, file your personal and business expenses separately. Be honest and keep your accounting books clean to avoid enquiries from SARS.
- Keep detailed and accurate purchasing records.
Accurate recordkeeping helps you manage your business expenses effectively. Record every purchase, from the smallest to the largest, so that it becomes the custom for everyone in the company. In this way you can see where your money is going and you can cut back if necessary.
- Shop around for a low-interest credit card.
As a small business there is the possibility of acquiring a credit card with low interest rates, so visit different banks and find the right one for you. Your card should assist you in expanding your business without the worries of growing debt from high interest rates.
- Run reports early and often.
Review your expenses on a weekly basis so that any additions will be picked up immediately. Do this right from the start and include every aspect of your business, including salaries and any new expenses you might have incurred. This is easier than having to backtrack later.
- Invest in technology that will last.
Don’t try to save money on inferior technology; rather buy better quality and save on repairs and replacement costs in the long run. You will get more value from the better product and it is also tax-deductible.
- Continue financial responsibility.
The skill of budgeting effectively and saving money is imperative for launching a business. Don’t stop saving money after a while; continue to do so and expect the same from your employees. Growing a business is only possible when you accept your financial responsibility. By using these cost management tips your business will become financially more flexible as it expands.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.