When your startup starts to grow into a fully-fledged business, it often comes with increased business expenses. You’ll need to hire more employees, you’ll have to pay rent for a larger office and you’ll need to start paying for professional services. With all these expenses in mind, it can be difficult to manage your budget without the help of an accountant or financial advisor, which in itself is yet another expense.
The difficulty in managing these extra expenses comes in your ability to plan ahead. While it’s difficult to predict growth, it’s still important to try your best to anticipate when your business is growing. The earlier you realize the signs, the more quickly you can prepare your business for its inevitable growth.
If you’ve suddenly had a surge of popularity and you’re struggling to deal with your financial situation, or if you simply want to find ways to prepare your business for the future, then here are a couple of ways to curb your business expenses.
Identify your biggest expenses
First, you’ll need to do a bit of budgeting yourself. Start by estimating your business expenses. It’s important to be as realistic as possible so you know how much money you have to grow your business, and if you’re actually losing more money than you’re making. Start with a spreadsheet or a piece of paper and write down everything that you’re currently spending money on. If you were smart with starting your business, you’ll have at least some kind of logbook or online accounting service where you keep records of money coming in and going out.
Here are a couple of examples of businesses expenses that you should be recording:
- Rental fees – if you’re renting an office space, then count your rent as an expense
- Bills – depending on what your company does, you’ll have to take into consideration how much you spend on bills such as electricity or water
- Everyday office items – be it stationary or ink for the printer, count up your daily necessities and how much you spend on them
- Insurance – every business needs insurance to protect it from a number of different threats
- Employee salaries – you can’t forget to pay your employees. Make sure you count up any salaries you pay to remote employees and the money you spend on hiring freelancers
- Equipment – your employees can’t work without computers and other pieces of equipment, so make sure you take these into consideration
- Marketing – without exposure your business won’t see much growth, so set aside a part of your budget for marketing
- Research – a company cannot grow without research. It could be research on new technologies to add to your company or market research. Either way, knowledge is power.
Now that you understand some of the most important business expenses, here’s how to reduce them.
Rental fees
There isn’t really a reliable way to reduce your rental fees. If there are cheaper places to rent nearby then you could initiate a business move if it doesn’t affect your ability to operate. You could also try to negotiate paying less rent with your landlord, but that’s unlikely to be successful. In short, you can’t really do much to reduce your rental fees other than to move.
Bills
Try and teach your employees to be conscious about the energy they use. Turn off the lights when the last person leaves the office and use laptops instead of computers because they use less power.
Everyday office items
Waste is a common problem in office environments. Throwing out bits of paper because they only have a few words written on them or staff “accidentally” taking home stationery can be a problem, but it needs to be clamped down on and prevented.
Insurance
Business insurance costs can be lowered if you practice better safety in your workplace. Minimize the number of risks and problems that could happen in your office by securing it and ensuring it’s safe, and improve your security so there’s less chance of someone breaking in to steal something.
Employee salaries
You might end up paying employees too much because you simply have too many workers. Use a scheduling service such as Sling to ensure that you aren’t over-hiring or under utilizing certain employees. As a startup, it’s common to be swamped with many different tasks and, as a result, fail to realize that you’re hiring too many members of staff.
Equipment
If you’re a startup, there’s no shame in relying on second-hand pieces of equipment or hand-me-downs from larger companies. As long as a computer works and meets your needs, it’s fully usable and should not be overlooked. You may want to stay away from “industry-standard” equipment and software.There are plenty of free software alternatives and there are many brands that produce quality technological products for a low price—it doesn’t always have to be the latest and greatest.
Marketing
Marketing can be done cheaply if you know how. Utilize “free” advertising on services like social media. Advertising on Facebook and Twitter doesn’t have to cost money if you have great social skills to improve your online presence. Practice good SEO habits as well if you want to make your website stand out. Marketing is one of those fields where experience typically trumps knowledge because the landscape changes on a regular basis, so make sure you have members of staff that are capable of reading those changes and adjusting your marketing strategy to fit your audience.
Research
The only way to effectively lower the costs of researching something is to hire better employees. Not every employee is born even and some are better than others at introducing new ideas to your company. If you want the best, then you’ll have to grow talent by giving them the freedom to do what they want.
Hopefully, this article has given you some idea of what it’s like to run a business that’s booming, and how to solve the challenges that come with an ever-growing company. Business expenses should not be ignored because, before you know it, you’re going to be bankrupt and struggling to run your company because you neglected your financial situation.
