Happy New Year! If your new years resolution was to decrease your business costs this year, you may find my Top 3 Tips around this goal, very useful!
Tip Number 1: Ask yourself, do you really need to spend this money?
This is by far, the most important question you can ask yourself before you hand over your bank details for any transaction. One of the largest spend items I see across small businesses, particularly those who are service based or operate online, is spend on multiple online courses. So ask yourself, before you click the ‘Buy now to claim your course at this one time only special price’ – do you really need to complete this course? The time and energy you will need to spend on this course – could that be better spent, in following up referrals, building key relationships or perhaps working on a special offer of your own? Also, have a look back in your course catalogue, have you done a course in this subject matter before? Perhaps you never finished it – a lot have lifetime access, so go back and re- watch the videos and re-do the workbooks. If you are missing a specific part or want an updated version, perhaps a one on one session with someone in the industry will plug those knowledge gaps and cost you a lot less (plus take a lot less time to).
Don’t let your business fall into a ‘expensive hobby’ that many do. Spend your money wisely and if you do buy courses, make sure you complete them, otherwise they are a pure waste of money.
Tip Number 2: Complete a budget at the start of the year and review it regularly
Preparing a budget or a forecast as you proceed further down the year, is an incredibly useful tool. To prepare one, you first need to analyse the spend from last year, via relevant spend categories. This in itself, is very eye opening. We all forget how much we spend on different items until you sit down and look at. This is especially true of monthly spend items.
Once you have reviewed your spend via category, you then need to set a realistic budget for the next year which should be in line with your business goals. Want to report more profit by reducing your costs? Then go through and focus on your essential spend only. Add planned spending in key lines and some contingency to as well. Take out one off items from your spend from last year. If you need help with this, or don’t know where to start, do get in touch with us as we offer this service (in fact Kylie and Scott came from cost control roles in London, so we know a thing or two about Budgets!)
You also need to make sure you review your actual results against your Budget. Again this is a very powerful tool. If you went over budget in one month or one quarter, don’t beat yourself up over it but understand why and see if there is a way you can reduce other budgeted costs in future months, to get back on track. Celebrate the months to that you came in under budget on your costs because you were thinking about your essential spend! It’s all part of understanding your financials, which is the key to financial success, as it’s not just all about sales numbers!
Tip Number 3: Continuously review your essential spend and explore all options.
Is this years resolution to have more hours in the day? Perhaps your business has grown to a size where you have enough admin tasks to give to someone else to complete for you. But before you sign up with a Virtual Assistant charging £20 or £25 an hour – step back and look at the tasks at hand. The average pay rate for an admin assistant in UK, is £7.84 an hour. Perhaps you know someone, who used to work in admin or that you could show exactly how to do what you want them to do, who can fill that role for you. Employing people does not have to be scary or costly. We work with experienced HR professionals and also administer payroll services that are a lot cheaper then you might think, so the least you could do is ask for a quote and then weigh all your options up before you go to work with a VA.
As a final point, it’s really important to look at the bigger picture. There is nothing more rewarding then seeing your business grow, all those hours you’ve put into it, actually turning over a profit. It takes time to grow a business, so if you are starting out in business this year, congratulations on taking the first step, it’s a whole set of new skills to learn and it will take time to build up a client base, but it is very worthwhile to so try not to throw in the towel too soon if your business is not growing as fast as you’d like it.
We offer monthly billing options on all our accounting and bookkeeping services to, so if you are looking for friendly, professional support with your financial and taxation tasks, then do please get in touch.