Cash flow is the most important thing for a small business, especially in the early stages of its existence. Without it, the company won’t be able to grow and the threat of insolvency could soon become reality. Sadly, the truth is that the majority of all start-up businesses will fold within their first year.
No matter how much you prepare for increasing expenditure, money just seems to have a way of disappearing more than you’d like. It must be going somewhere however and there are usually ways to reduce loss and thus increase profit margins.
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Here are seven ways your business could be losing precious money and how to target those areas in particular.
Overview
Viewing company spreadsheets is a great place to start. This overview of your spending will help visualise where expenditure is highest and if these areas can be reduced. However, your figures must be accurate and up-to-date to obtain a clear picture of these finance.
Accounting
Using professional accounting software is a must to achieve this. You should regularly update balance sheets, helping track income and expenditure in minute detail. Consider which type of software is best suited to your business as there are plenty of accountancy websites online.
Shop Around
When buying equipment and services, consider if company spending is really as efficient as it could be. Don’t just plump for the first item you see, shop around from multiple outlets and use price comparison websites if possible. You could also play suppliers off against each other to attract the best deal.
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Petty Cash
Individual small purchases won’t seem like too much on their own but will soon add up over time. Many of these minor purchases can go unaccounted for, meaning you don’t have a clear indication of where your money is going. Take back control of these petty cash expenses by signing off all purchases yourself and adding receipts to them.
Outsourcing
For smaller businesses, consider areas of the company that don’t actually require full-time staff. For example, outsourcing jobs in the social media, web design and copywriting departments could save you plenty of cash at the end of each month.
Utility Bills
Evaluate your business utility bills and how they can be reduced from your office or workstation. Invest in such apparatus as a programmable thermostat, energy efficient light bulbs, energy efficient insulation and low-flow toilets that will lower bills in the long run.
Accountancy Advice
Hiring an accountant to help out the business may cost in the short term but will save substantial amounts as the business progresses. They’ll help run your accounts and streamline company spending, also offering crucial advice on tax returns and banking. Precious time will also be saved, allowing you to allocate resources to other areas of the business.
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If you found this article helpful, you may also be interested in Why You Shouldn’t Try Do-It-Yourself Accounting and The Subtle Art Of Office Cost Cutting.
