If you are running your own business, you have probably faced some of the restrictions and limitations; for example your productivity was low due to high costs. The income of your business will be completely overtaken by high business costs, and in order to stop this from happening, there are a few things you can do. In a nutshell, increasing the net income of your company can be achieved in two ways: increase your revenues or decrease your expenses.
Write things down
This may seem like a waste of time to you, but you are not aware how helpful it is to put everything on a ice of paper in order to see things clearly. Write down all your expenses from not only the previous month, but going several months back. Once you have it on a piece of paper or a spreadsheet, you can take some time to categorize the expenses; group expenses for similar items together, for example stationery expenses for office supplies such as post-it notes, pens, pencils and printing paper. Write down everything, any case the money goes from the company matters and you should pay attention to it.
Analyze each expense category
Be thorough and honest with yourself once you start analyzing all the categories. Can anything be done to reduce the costs? For example, a company spends a lot on suppliers and rather high electricity bills. Supplier invoices can sometimes overcharge, and you won’t even notice Missing discounts, incorrect charges and double billings are common and you should pay attention to it. Another common mistake are frequent small orders which eventually cost a lot more. You should change that and order less frequently bigger quantities. Or it can happen that your electricity bill is way too high. Heck up whether your computers are on during the night. This may seem irrelevant at first, but it will show on your next electricity bill. Take your time and develop a list of possible solutions for each category on your list of expenses.
Save money on storage space
If you need a lot of space for your business, you probably have a storage unit somewhere, where you keep the goods. In order to save some money, you can invest in a container shelter instead. It’s spacious, Eco-friendly, easily put together and way cheaper than a regular storage unit. All Shelter container shelters will allow you to have a good, spacious and usable storage space for less money. They offer UV protection and are made of non-corrosive steel, and since they are incredibly easy to dismantle and reassemble, you won’t have any problems if you decide to relocate them after a while.
Analyze your customer base
Once you take a closer look at your customer base, you will find valuable information which can help you save money in the long run. In depth analysis will show you that you have several groups of customers: those who are highly profitable, those who are somewhat profitable, and eventually, outright loss makers. In the latter group are the ones you don’t need to focus on, rather you should forget them completely. Getting rid of the loss-makers is one thing, but you should also focus on the other two groups of customers as well. Try mapping out the on-boarding sales prospect process and according to it, you can work better with your employees by giving them information which will help them attract more profit-producing customers to your company. You can reduce selling costs or choose to divert resources to more profitable sales. Regardless of what you choose, you will be increasing the profitability of your company.
Choosing to put into action some of the above-mentioned ideas will result in noticeable cash and profits savings. If you start cutting costs, your company’s expenses will decrease on the income statement and this will eventually result in increased net income. The higher the net income, there is more money the company can reinvest into self-development. If the owners take some time to analyze the expenses which the company has, this will allow them to see exactly where cuts can be made, thus creating new ways which will result in reduction of their current costs.