An entrepreneur who only pays attention to cash inflow is like a driver who is alert on the freeway but closes his eyes on the exit ramp. Both are on a collision course with trouble.
Judicious oversight of cash outflow is vital. Monitoring the handful of variable expenses that tend to significantly contribute to cash drains can help uncover any spending zones that are getting out of control. Five areas in particular deserve focus.
- Travel expenses. Meals and travel are a category of frequent excess spending. Track these carefully. This assures that cash from rising sales is not thoughtlessly devoured by business meals or travel, including local transportation costs.
- Technology. You don’t need brand-new devices every year to operate your business efficiently. Reducing cash outflow for computers, smartphones, and software contributes substantially to profit.
- Office enhancements. You don’t need expensive furniture, especially if you seldom or never meet customers at your location. And spending a lot on finishing off rented space is a mistake that’s unfortunately quite common.
- Excessive outsourcing. Although legal and accounting work is best left to professionals, internal handling of many common tasks minimizes cost. Website maintenance, social media presence, document shredding, and office cleaning are duties every entrepreneur can allocate time to complete.
- Training expenditures. Training may be required to internally accomplish some activities. However, entrepreneurs should be selective about professional development. Avoid the temptation to attend multiple conventions and seminars. The fees can quickly eat away at your bottom line.