The seventh key to expanding your business involves reducing overhead costs. These are the fixed expenses in your business that remain relatively constant as your sales grow, such as phone bills, electricity, rent, and interest payments.
How frequently do you reassess your overheads? It’s advisable to conduct this evaluation at least once a year. Simply review each line item in your annual financial statements or Xero reports.
Additionally, take a close look at the automatic payments and direct debits from your business bank account. Are you paying for services or subscriptions you no longer require?
While most business owners are cautious about their expenditures, establishing an annual expense review as a standard practice is beneficial. Here are some areas you might want to focus on:
Phone and Power Contracts
Are there better deals available from other suppliers?
Can you secure a lower interest rate?
Cloud-Based Software Subscriptions
These monthly expenses can accumulate over time. Consider adopting a “use it or lose it” approach.
Computer Support Contracts
With most software moving to the cloud, do you need to reevaluate your IT support contract?
Assess whether your advertising efforts yield a return on investment (ROI) in terms of generating leads. It might be time to rethink your traditional advertising spend.
Consider transitioning to a paperless approach to reduce print-related expenses.
In addition to managing these overhead costs, ensure you have efficient systems in place to take advantage of prompt payment discounts.
Speaking of overheads, let’s address accounting fees. If you view your accountant as an expense, consider ways to minimise it. Alternatively, if you see accounting fees as an investment in the growth and improvement of your business, you might want to explore increased investment.
Feel free to reach out to us for assistance in creating a strategic plan. Having an annual plan and access to an independent advisor can provide the guidance and accountability you need to achieve your business goals.
Remember the words of Henry Kissinger: “If you don’t know where you are going, every road will get you nowhere.”
On 11 October from 12-1pm, Sharp Accounting will be running the 7 Ways to Grow Your Business Seminar. This will be held at our offices here in Ballarat. Click here to find out more and register at no cost.