Large corporations can absorb the cost of an occasional bad financial decision or over-expenditure. However, for a small business or a startup, a few poor financial decisions can spell disaster.
That’s why it’s imperative to find ways to avoid wasting your company’s money, and to ensure that the money that you do spend is spent in the right places.
Take a look at some tips for ensuring that your business doesn’t suffer due to an unfortunate financial mistake….
Resolve Inefficiencies
Waste caused by inefficient practices can cause financial problems for all kinds of organizations.
Take purchasing for example: if your purchasing practices are not streamlined and efficient, you’ll wind up over-buying in some cases and under-buying in others, leaving you not only strapped for cash, but also missing things that you need when you need them, which can result in lost sales, wasted time, or more overspending.
Consider the case of the community college described in the piece, Between a Rock: Finding “Hard Savings” in Community Colleges.
Disorganization in the college’s purchasing practices led to not only monetary waste, but wasted space and a general lack of control or accountability in employee spending.
With the help of an eProcurement tool, the college was able to resolve the inefficiencies, eliminate wasted paper and resources, and allow various departments to work together, providing greater accountability and opportunity for oversight, important checks and balances that prevent overspending.
Know When to Hire Professionals
As a small business owner looking to cut costs, it can be tempting to try to do everything yourself.
After all, you’re the one who knows your business inside and out, so who could be more qualified?
And more importantly, the more that you do for yourself, the less money you’re spending on outside providers.
However, there’s an important difference between spending money wisely and failing to spend money at all.
Would you try to rewire your own home to solve an electrical problem, or would you call in an electrician? Probably the latter – trying to do it yourself might result in missing something important, or even causing a fire.
Why would you treat your business any differently? Taxes are a great example of a job that should be assigned to a qualified professional.
It’s worth the money to hire someone who knows how to find every last deduction and credit that your business is eligible for – and more importantly, who won’t make any costly mistakes.
Make Sure You’re Tracking Invoices
Just as important as keeping track of the money going out is keeping track of the money coming in. It can be surprisingly easy for small business owners to lose track of who owes what money and when. You could be missing payments entirely or accepting late payments without realizing it.
Setting aside time every week to review your business’s finances and track incoming payments can make a big difference to your bottom line.
Make a note of payments that you’re having difficulty collecting on so that you can initiate collection actions. This may give your business funds that you didn’t know that it had.
Remember that even small cost savings and increases in income can add up quickly, especially when your budget is also small.
By eliminating inefficiencies, knowing when to utilize professional assistance, and tracking your income and payments, you’ll be better able to find the room that you need in your budget.
About the Author: Cheryl Baer writes on a variety of topics including business development and finance.