Year End Small Business Financing Tips: Taking Stock of Expenses
With the end of the year rapidly approaching, small business owners are preparing to take a survey of the time that has passed and use the information they gather to improve going forward. For some, budgets need to be balanced in order make room for growth, hiring employees, obtaining new equipment or opening new locations. For others, a dip in profitability means that hard questions need to be asked regarding what went wrong, and how to fix it going forward.
Revenues and expenses must be balanced in order to ensure that your business will not only be able to work in the short term, but adjust to growth as well. Your business should be looking to grow in the new year, and with technology playing a large role in how small businesses are tapping into broader markets, the tools are being developed or already exist that can allow you to do so. Getting acquainted with trending technology such as mobile and e-commerce as well as mobile payments being pursued by Apple, among notable competitors, is something that business owners should do to position themselves as early adopters and consequently position themselves advantageously within their industries.
Identify where your expenses are yielding revenue and where they are creating value. While you might be paying for an expense that does not directly contribute to revenue on your balance sheet, you must evaluate where it may be paying for itself through contributing positive productivity or morale to your team. When you have identified a cost on your balance sheet that you are unsure of, reach out to your managers in order to see what the expense is going to. It may be the case that a charge is appearing on a balance sheet that is labeled in such a way as to not make it immediately obvious that it is coming from one of the services you are using, for example a subscription from a business service that is billed by the accounting department from their parent company, thus showing as a different name on your expense report. Consulting managers before eliminating costs can help prevent these types of misunderstanding. Be aware that a manager might be using a service that they don’t want to part with, but if they can’t justify the costs, you may have to have a discussion with them regarding ways to compromise for the benefit of the bottom line.
Be on the lookout for recurring expenses. Recurring billing for services that your business uses can often be a time-saver, freeing you up from dealing with invoices every month. That said, it is all too easy to place yourself on recurring billing that you cannot justify based on your usage of the service you are paying for. It is common for free-trial software to begin a billing cycle after the trial period runs out. It may also be the case that your business signs up for a plan on a monthly billing schedule to try something out. In the event that it becomes a staple, you might wish to pay for a longer term cycle in order to get a year over year discount on the service.
Photo Credit to Thomas Eagle on Flickr