Published on October 10th, 2019 | by Bibhuranjan0
4 business expenses that can be and should be reduced
Before you start cutting costs, you need to understand what is meant by that clearly. Expenses are not only money spending. These are any resources that you and your employees spend on solving work problems (first of all, time). Resources can also be redirected – this can also help to earn more.
Before you start to brainstorm about reducing your business expenses, make sure that you are relaxed and fresh. Enjoy time with your family or friends, watch a good movie, or play your favorite casino game in an online casino. You can choose the best online gambling website from mindepcasinos review. Relax enough so you can make a good review of your expenses.
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Main expenses that can be reduced
First of all, create a list of monthly expenses. It is important to act in this order:
- Make a list of costs.
- Enter data on expenses for one month.
- Then enter data for the largest possible period to see the costs in dynamics.
If you ignore this order and start entering all the numbers at once, you can fall into a cognitive trap. Seeing a growing amount of expenses, you will subconsciously strive to reduce it and can omit some items of expenses. The main goal of the table is to see the whole picture.
In most cases, the cost of the premises you need for business is the most significant, especially if you pay the rent. Then you can reduce costs in three ways:
- Reduce rental cost with a landlord
- Lease a part of the space – but you need to take into account the difficulties associated with legal and accounting support of the process, and the emergence of new risks (you actually rent your legal address)
- Move to less expensive premises
However, moving might cause other problems; it is not worth it if the less expensive premises have a bad location. You can lose a lot of your customers due to this change.
It is recommended to purchase the goods that people want to buy. Refuse to purchase low-margin goods, those that do not bring you any profit. Reduce the number of items you have and focus on those products that are being purchased more often.
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Feel free to pay good salaries to people who are achieving goals. It is not always necessary to reduce or lay off workers to reduce costs.
Find out which employees are the most effective. Compare their successes in three ways: the number of sales, revenue, a margin of the goods or services they sell.
Estimate the value of new and old customers. If you spend more on attracting new customers than you earn on them, you need to redistribute marketing expenses and focus on retaining old customers.
Some entrepreneurs believe that attracting as many new customers as possible is a winning strategy. But it becomes unprofitable if you do not know how to keep the client and make money on it for a long time.
In the end, to check how good you are in reducing your expenses, make a table of expenses and income on one page. It’s simple: revenue should grow, and costs should be reduced, or at least remain at the same level.