Different types of businesses naturally encounter different costs, but some operational expenses are common across the board.
Evaluating and minimizing these costs is good for your cash flow. So let’s take a look at some of the biggest small business expenses - and what you can do to keep them under control.
Operating out of your home or garage comes with certain advantages over renting a public office or retail space. But whether you’re paying a mortgage or leasing a studio, your location represents one of your biggest company expenses.
While it can often cost less to run a business from home, if that’s not feasible – or you’ve outgrown your private space – there are other ways to keep location costs down:
Steering your organization toward more energy-efficient operations can impact your bottom line for the better! Reducing your energy consumption not only helps the environment, it will reduce your utility costs. Consider these tips for greening your expenses:
A great team is essential for success. But full-time salaries - and the benefits and taxes that go with them - can eat up your budget in no time.
Evaluating your staff situation frequently is essential for maintaining an efficient balance between meeting the demands of your growing business, and managing the costs associated with personnel.
In many cases, outsourcing certain tasks on an as-needed basis (think bookkeeping, marketing, or product support) will make more sense than carrying a regular payroll expense.
Every company’s risk management plan should include adequate business insurance coverage. While this protection may seem costly on a month-to-month basis, it’s a priceless investment when you actually need it.
You should carry general liability insurance as a minimum, but depending on your needs and the nature of your business, you could also require:
There are many specialized forms of commercial protection, but not all of them will benefit your business. It’s important to recognize that, while your insurance needs may change as your company grows, excessive policies and premiums are an expense you’ll never recoup.
Do your research, find an insurance advisor you trust (preferably one who specializes in your industry), review your coverage needs annually, and consider consolidating policies through a single provider.
And remember the longer your history of paying premiums on time without a claim, the more leverage you have when it comes to renegotiating rates.
Here are a few additional expense checkup odds and ends that may prevent little cost leaks from becoming major cash flow drains:
When it comes to trimming company expenses, skimping on critical services like accounting and tax return preparation is NOT the best place to start. Professional assistance with keeping your expense records organized not only allows you to see where your money is going, it lets you make the most of any business deductions.
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