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Trimming the Fat – A Guide to Cutting Unnecessary Business Expenses

27 February 2018 No Comment

Keeping your business expenses in check is a constant challenge for business owners. When things are going well, it’s easy to justify various expenses in your company, as it makes sense that they must be contributing to your success. However, as soon as there is a dip in income or your operations are not running as smoothly as usual, you have to take a very close look as to where you can start trimming the fat. This can be a challenging exercise but is crucial to keeping your business costs to a minimum while maximising your profits.

Whether you need to cut your business costs by 10%, 20% or even 30%, it can be an overwhelming position to be in. It seems impossible to know where to start. Your marketing budget is as low as it can go, the staff you have in place are justifying their wages and all of the software and applications you have are working well. The best way to approach the issue of cutting costs is to take a calculated approach. Consult your bookkeeping software to find out where you’re spending the most and take it from there.

Continue reading for our guide on cutting unnecessary business expenses as effectively as possible.

Analyse Staff Performance

Finding inefficiencies in most businesses starts with your staff. It’ not always the easiest decisions to make to leave someone, or a bunch of people, go but sometimes it’s necessary. You might be able to restructure the staffing schedule to get more out of your personnel but either way, this is the first area of your business to take action.

Start with looking for team members who are not ‘fully-busy’. If there are people in your company who are behind their desk all day but only have enough work for half the day, it goes without saying that they are a drain on your capital. If you find that there are multiple members of your staff in this position, try consolidating the jobs so one person handles the work of two people, ensuring they are busy all day.

Be sure to keep the stronger team member and explain what their responsibilities will be going forward. You will need to monitor their performance to ensure they can handle their new workload with any complications.

Decrease Department Management Costs

When you first structured your company, different departments were put in place to handle the various aspects of your company. You may have hired experienced managers to ensure that these departments ran efficiently and to train team members on how to complete tasks as efficiently as possible.

Now that you have been in operation for some time, these experienced managers might no longer be necessary. The departments they helped you to set up and run efficiently should, by now, be running themselves with some team members taking an active and more senior role in operations. If this is the case, you might want to consider removing some of these senior managers from your payroll, since they are often some of the most expensive employees in your business. This will also cut down on bonuses at the end of the year and pay-raises which often come associated with these more senior staff.

Reduce Miscellaneous Expenses

Every business has its fair share of miscellaneous expenses. It could be bringing a client out for coffee, buying a new stapler or throwing a birthday party for one of your long-term staff members. While some of these expenses might be necessary, not all of them are and it’s important to keep an eye on them so they don’t spiral out of control.

When you’re looking to cut overall expenses in your company, these miscellaneous expenses are a great place to start. Most of the time, they are completely unnecessary and one of the biggest drains on your company finances.

Why You Need to Reduce Unnecessary Business Expenses

Managing your monthly outgoings is an important part of managing any business and is a sure-fire way to increase your profits. You could be spending thousands of dollars each month on things that are having zero impact on the success of your business and this needs to stop.

Assess your staff to ensure everyone is pulling their weight and everyone has enough work to warrant their position. Look at your senior staff list and think about how much they are currently contributing to your company and be sure to eliminate any other unnecessary expenses you may be incurring. By taking these steps, you’ll have more money to invest in the areas of your organization that really matter and improve your bottom line.  

 

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