When I was in college, my meal budget was $1 per meal. One whole dollar. (And before you ask, no, a burger from the McDonald’s dollar menu was not my go-to meal!)
My parents were generous in helping me financially get through college, and one of the ways that I showed my gratitude was by stretching my funds as far as I could. So, I budgeted $100 a month for groceries. To help me stick to that budget, I broke it down per meal to help guide my purchasing decisions in the store. For example, I would read a food package closely and if it was $5, I would ask myself if I could get 5 meals out of it. If I couldn’t, then I had two options: put it back on the shelf and find something else or I could skip breakfast a few times to boost my dinner budget to $2 per meal for a few days. If you’ve shopped this way, you know why ramen is so popular with college kids. For 25 cents you have a pre-packaged, easy-to-cook meal. And if you are feeling fancy, you could chop up some veggies and add some canned chicken. Yum!
Breaking my tight budget down into smaller, understandable pieces was a more practical way of sticking to my budget than looking at $100, grabbing a bunch of stuff in the store, and hoping it would provide me enough meals to last the month.
Business budgeting works much the same way. If you are feeling a pinch because of the economy, increases in interest rates, or are worried that sales might go down because of a possible recession, now is the time to reconsider your budget and cut costs. I’m ready to serve as your certified dollar-stretcher by identifying specific places where you can cut costs to free up cash, and increase profit, opening up investment opportunities later on. Contact me today for a free consultation to learn ways to stretch your dollars so it benefits your bottom line.
Business Tips For Cutting Costs And Stretching Your Dollar
As you begin your annual budgeting process, it’s the perfect time to take a close look at your expenses and reduce them as much as possible. It’s good business practice to always be looking for ways to cut business costs, especially to prepare for bumps in the road that may be coming your way.
The basic question to ask yourself is: are there any places where your business is spending more than is needed?
As you consider where your business can reduce expenses, here are a few easy-to-understand cost saving ideas that are often overlooked. (Don’t worry, I won’t suggest that you serve ramen at your next catered lunch meeting.)
Conduct an audit on your software subscriptions. Making a list of all of your subscriptions may leave you stunned at how many you have! Calendly, Zapier, Asana, Amazon web services are just a few examples that are often on business subscription lists. Once your list is complete, check for any overlaps in functionality. Do two subscriptions offer the same features? If so, cancel one and transfer all tasks to the other. You should also evaluate which employees or contractors are using each subscription. If it is a “pay-per-seat” subscription, but 3 of the 5 people with a seat aren’t using it regularly, promptly remove them and save the cost. And of course, cancel subscriptions that you aren’t using.
Remember, even though your bookkeeper may be seeing these expenses each month, they may not realize it’s a wasted expense. They don’t necessarily know which ones are not being used, so taking a close look at your budget annually, at a minimum, is good practice to ensure you are cutting unnecessary expenses often.
Investigate cell phone reimbursements and plans. Just like with subscriptions, you should make a list of everyone who is getting reimbursed for their cell phones, or is on your cell phone plan. If you reimburse several employees’ cell phones each month, it may be cheaper to purchase a corporate group plan and supply the phones directly. If you already have a plan, you should reconsider who needs it to ensure you aren’t paying for it unnecessarily.
Confirm proper classification of employee worker’s compensation insurance. Not all employees are created equal from a worker’s compensation perspective, so make sure insurance isn’t a higher expense than it needs to be. For example, if you own a roofing company, the employees who are actually up on rooftops have a higher risk of injury than your receptionist who is behind a desk all day. Talk with your insurance agent to ensure you have all employees classified appropriately for their job duties. At a minimum, you should do this annually – even if it’s not time to renew your policy, it won’t hurt to call and ask if you can adjust the classifications.
Move to electronic recordkeeping to save the trees and your pocketbook! A lot of businesses made the transition to electronic paperwork and virtual processing systems during the pandemic to lessen the amount of physical contact between people, but it’s a good way to reduce office supply expenses in general. If you are married to paper, this cost-cutting method may feel like a bad paper cut, but I promise that the transition will be great for your business! Virtual processing is often quicker, there is less room for error, and also saves paper storage space cost.
Ensure you are insuring only active employees. You won’t believe how many businesses terminate an employee – or the employee quits – and they continue paying for their health, dental, long term disability, and life insurance costs for months! Make it a part of your offboarding process to remove terminated employees promptly from all insurance plans.
Pay your vendors early. If you have good cash flow, consider paying your vendor bills early to take advantage of early pay discounts. Not sure if your vendor offers early pay discounts? Check the bill for terms such as “2%/10 net 30,” which means, if you pay this invoice within 10 days, you get a 2% discount, and if you don’t, the full payment is due in 30 days.
Stop the office supply habit. If it feels like your office supplies expense budget continues to grow year-after-year, consider talking with your employees about reducing and reusing as much as possible. Let’s be honest, some of us have an obsession with buying office supplies that developed in elementary school with Lisa Frank folders and notebooks. In the workplace, however, we really only need a couple of colors for highlighters and pens instead of a selection that includes the entire rainbow. You can also keep a limited supply of paper on hand to encourage employees to not insulate their office with unnecessary printed paper.
Hire a fractional CFO instead of a full-time CFO. If you don’t already have a CFO on staff, chances are that your business doesn’t need a full-time employee to fill this role. A fractional CFO is a great way to avoid the high expense of a full-time CPA while still reaping all of the benefits of having a financial expert on your team (I like to call myself your personal, financial golf caddy). A good rule of thumb is to start thinking about hiring a fractional CFO when you are getting close to the $1million revenue mark.
So what are you waiting for? I’m ready to serve as your official dollar stretcher and help you decrease costs, and increase your profits. Contact me today to start the conversation.