Achieving business goals requires planning – and that means the wise use of limited resources. Especially cash. As businesses grow beyond the startup phase, they should replace aggressive spending with a focus on sustainable spending. The entrepreneur who can’t or won’t change this spending focus has cash flow delusions; decisions will be based on an unrealistic understanding of the business’s status. The answer is budgeting.
Budgeting for micro operations: Budgeting is a tall order for a micro operation of one or two people. But even operations of this size should compare side-by-side financial statements of multiple periods to show the results of their cost-cutting moves, such as those listed below:
- Outsourcing tops the list of advantageous ways to allocate cash. Contracting with outsiders for everything from bookkeeping to maintaining your online presence usually minimizes cost and eases administration.
- Unless you have a location-based shop for customers, ditching the superfluous landline phone is certain to benefit the bottom line. Ask your team of outsourced workers to use cell phones.
- If you’re not already a paperless operation, making the move to computer-based document storage is a key cost-containment technique. Plus, it reduces clutter and keeps you organized.
- When purchasing equipment or furniture, used is often just as good as shiny new stuff and will save considerable cash.
The best way to minimize costs is to examine your financial statements at the end of each month. This enables you to identify excessive expenses and monitor the progress of your cost-reduction efforts.