Business Expense Management Tips: 5 Steps to Cut Costs

If you are a business owner, sometimes it can feel like you are simply drowning in bills. Entrepreneurship is expensive. Learning how to manage your business expenses is a hard lesson. Luckily we are here to help. Read on for some smart business expense management tips that will help you cut the costs of running your business and maximise your profits.

1. Review Your Expenses - All of them!

Be it a big business or a small business; expense management starts with reviewing your ledgers. You need to understand where the money is coming from and where it is going. Financial sense and clarity are essential skills for a business owner. You need to be very familiar with your ledgers and review them periodically.

This is especially true if you are a new business owner and just starting to learn how to manage expenditure. You may not always realise where you are going wrong. It is important to know what kind of expenditures are justified and which ones are wasteful.

You should take the advice of a mentor, either a relative or friend more experienced in business or from a professional consultant. They can help you understand the intricacies of business expense management and where you can cut costs. For example, is your office space too expensive? You can shift to a different location where property rents are cheaper.

But if you are running a business that depends heavily on location, for example, a hotel or restaurant, then cutting costs on property and rents is not an option. An experienced mentor or business consultant can help you understand the difference between when a cost is a justified business expense and wasteful.

2. Cut Down on Waste

Identify where you are wasting money when it comes to your business. Which costs are unjustified and wasteful. If you are new to business expense management, then these might not be as obvious to you as you think.

Office supplies are often a big wasteful expense. Waste paper and misplaced stationery are major, unnecessary strains on your office budget. Going paperless not only cuts costs but also makes the storage of management of records and ledgers easier. You no longer have to dedicate huge storage spaces for storing files and records or employ people to sift through them. By digitising your records, you will manage and access them more easily and which significantly less waste.

Office spaces themselves are also a major business expense. Unless you have a business that depends strongly on physical office space, try your best to keep your base at home or have a mobile business. If having an office space is absolutely necessary, try to manage your expenses by renting or leasing an office in a cheaper location.

3. Get an Accounting Management Software

Part of cutting costs and lowering your dependence on paperwork includes going digital. Digitising your accounts will not only cut your costs on paper and stationery, but it will also help cut down staffing and space requirements. You will no longer need to employ accountants and office assistants to create and maintain your ledgers; you can do it digitally by yourself. This is especially true if you are a small business owner without complicated accounting needs.

For small business expense management, apps like OkCredit can be trusted to maintain your ledgers safely, accurately and efficiently. OkCredit is a digital bahi khata app, specially designed for Indian business owners and their needs. It enables you to record all your transactions, debit and credit in one place. You can access all your accounts and record easily without having to sift through piles of paper records. This smooths out your day to day business operations.

Digital accounting management services like OkCredit are free and easy to use, not requiring any advanced accounting knowledge. This means you can take care of your account management needs yourself and save costs to hire a professional.

4. Learn to Manage your Staff

Learn to be efficient with your staffing. Effective staff management is the first step towards effective business expense management. Make sure only to hire the staff that you absolutely need. Overstaffing is an easy way of wasting money in any business. Also, ensure that the staff that you do hire are utilised to their maximum potential. Don’t overwork or underwork your staff, as they are one of your biggest assets in running the business. Instead, make sure to hire efficient, skilled and qualified workers and make full use of their skills and specialisations. Mismanaging your staff is a good way to waste business hours and give the illusion that you need more staff than you actually do.

Hire interns and trainees to do low level and unspecialised work. This way, you don’t have to waste the time of your skilled employees. Interns are a low-cost way of increasing staffing without overextending your budget.

Use staff management software and apps like OkStaff to manage your staff and handle their payroll, attendance, leave and absences. This is another low cost and efficient way of handling your staff transparently without hiring extra managers and supervisors.

5. Use Digital Marketing Instead of Traditional Advertising

Traditional advertising methods like print ads, radio, television etc. are expensive and outdated methods of marketing. They add unnecessary expenses to your budget and are not very efficient in marketing in today’s digital age. This is because traditional advertising methods do not always ensure that your advertisements reach the correct demographic or the demographic you intend to sell your products or services.

Search Engine Optimised (SEO) is a great way to promote your business. Digital marketing includes Google and Facebook ads, influencer marketing, social media marketing etc. These marketing techniques maximise the share ability and relatability of your advertisements and give a much better return on investment than traditional ads. It also makes your brand appear more modern and trendy than old-fashioned, which is appealing to the millennial and Generation Z customer base.

You can also pay bloggers to create blog posts, videos and audio content specifically for your business. This type of marketing is indirect and more shareable because it is not very overt about being an advertisement instead of a commercial film or an ad jingle.

Digital marketing is an excellent way of cutting costs while marketing your business.

Also read:

1) Why are Small Businesses Important to the Community?
2) Where to Get a Small Business License?
3) Best Tips for Small Business Owners
4) How To Get Small Business Loan From Government?

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FAQs

Q. What is business expense management?

Ans. Business expense management includes the procedures and systems employed by businesses to manage their expenses, especially those incurred in the day-to-day running of the business. It is important to learn how to manage your expenses to ensure the smooth running of your business operations.

Q. Why is it important to cut costs in business?

Ans. Cutting costs, especially those that are wasteful, ensure that your capital is spent efficiently and cost-effectively. This increases your RoI or Return on Investment and prevents wasteful spending and unnecessary costs.

Q. Do I need to hire professional consultants to help me with business expense management?

Ans. You can hire professional consultants to help you with your expense management, especially if you are a new business owner and do not have much experience handling costs and liabilities in running a business. You can also take the help of a mentor to help you show the ropes. A trusted relative or a friend who is an experienced businessperson can be a good mentor.

Q. Is going paperless an efficient way of cutting costs?

Ans. Going paperless can be a very efficient way of reducing the costs of running your business. Paper and stationery account for a lot of wastage and inefficiency in business operations. Going digital and computerising your paperwork is an easy way of ensuring fast, efficient and cheap processing and management.,