The chief goal for any business owner is to maximize profitability. While it’s important to increase revenue, supporting profit margins means cutting expenses. Here are some common sense tips you can implement to run a thrifty company and keep operating costs low.
Maintain Accurate Purchase Records
You’ll never keep track of where your money is going if you don’t have detailed and accurate reports to go by. Be sure that everything gets captured, from payroll to new printer paper. Find inexpensive or cloud-based accounting software that lets you quickly run monthly reports by subject, department, or project. That way you can easily determine baselines across the board, and spot anomalies, If you can clearly see where the problem lies, you can then takes steps to reduce the waste,
Make Wise Technology Purchases
In the digital age, it seems like newer and better versions of software and gadgets are constantly coming out. That doesn’t mean you have to run out and buy them to stay competitive. But neither should you hang on to outdated technology as long as you possibly can, or settle for the cheapest products you can find.
Look on all your technical purchases as financial investments, because that’s what they are. Buy from a company that supports its products and will be around five years from now. You or your CIO should do the research to ensure the purchase satisfies a real need and can justify the expense in terms of productivity.
Watch Utility Bills
Whether you’re running a single office or a factory full of machinery, your power bill is unavoidable overhead each month. Start tracking it so that you can get a good idea of reasonable costs vs output. Post or send out reminders so that all your people are onboard with energy conservation, such as turning out lights and turning down heat or AC when they leave for the day.
Have a licensed electrical service come in to inspect your entire system and see where you can improve efficiency in your power use, whether it’s updating equipment or fixing faulty circuits.
Shop Frequently for Low-Interest Credit
This is basic strategy for anyone that applies to businesses in particular. Every dollar you pay needlessly in interest is a dollar wasted. Take steps to improve your credit so you can borrow at cheaper rates, including credit cards, merchant accounts, and bank loans. By borrowing what you need at low rates, you’ll have a stronger cash flow for handling surprise expenses or re-investing in the business.
Even if waste is still leaving you healthy margins, that’s money you could be using to grow your company. The more you let slip away, the longer you delay reaching your business goals.