Calculate Your Business Expenses
I had a client once who spent hundreds of dollars buying matching furniture, matching file cabinets, hanging files and even matching folders. All for a space that no one else would ever see. Yet she had a challenge some months paying the basic bills (electricity and internet, for example) because her cash flow had been depleted.
Whether you’re starting business, or reassessing your business finances, it’s always a good time to examine your expenses to make sure you have ample cash flow.
Start by sorting your expenses into essential and optional expenses. Then review the list and double check every item you’ve considered “essential.” Is it truly essential? Meaning, will this expense enhance your efficiency and profitability?
For example, spending money on a transcription machine versus starting and stopping a recording manually, speeds up your ability to transcribe audios and maximizes your time. In this case, the transcription machine might be an essential expense. Hiring someone to do the transcriptions would be an optional expense; one that could eventually become essential as you grow, but not necessarily a must-have right now.
Taxes, utilities, supplies. These are essential business expenses. Some others that might be optional (and some essential options that can reduce your monthly expenses!) are:
- Full time secretary versus virtual assistant (full salary versus hourly needs)
- Voice mail versus answering machine (monthly charge versus one time fee)
- Purchasing equipment versus renting on an as needed basis (run the numbers yourself to see which is more economical)
You get the idea. Think outside the box. Look over every business expense with an open eye. A simple reassessment of your business expenses could instantly increase your profits 25%.
Paula Langguth Ryan is a mediation and marketing maven, specializing in financial issues for small businesses. She’s the creator of the Supersonic Prosperity Oriented Copywriting System http://www.paulalangguthryan.com/shop/supersonic-copywriting/ and provides strategic financial consulting services to small business owners. She’s also the author of Bounce Back From Bankruptcy: A Step-By-Step Guide to Getting Back on Your Financial Feet and the forthcoming Break the Debt Cycle – For Good! You can follow her on Twitter at copytamer and get free resources at www.paulalangguthryan.com. If you need help or assist please email us at firstname.lastname@example.org.