Updated: Mar 11, 2021
By Jim McKinley
Photo Credit Pexels
Launching your own business and being your own boss comes with numerous perks, but the often-overlooked downside is the financial management required to run a successful business. Most small business owners launch a startup because they are passionate about a product and service. However, many people are not equipped with the skills necessary to manage the business, resulting in a struggle with balancing costs. This article will address some practical ways you can cuts costs in order to save money and stay on top of financial issues.
Be Strategic and Shop Around for the Best Deals
Consciously saving money on costs and being strategic in how you spend will help improve the profitability of your venture. How and where you can save on costs will depend on the type of business you operate. For instance, in the food industry or in an office setting, you will want to buy in bulk for items you use all the time. If you have inventory or equipment that is unused, you can sell them for profit. If you hire an outside business to do your printing, it could be more cost-effective to buy a laser printer that is multi-functional with fax and scanning capabilities.
When it comes to supplying your business with necessary supplies and equipment, make sure to shop around and utilize cashback offers and coupons for stores such as Office Depot. You can also take advantage of clearance sales at retailers like Staples to help save even more money. By planning ahead on costs, you’ll be increasing your profit in the long run.
Maximize Your Tax Deductions and Plan Ahead
Some of the benefits of running a small business are the deductions you can take. However, come tax time you may find yourself overwhelmed if you don’t keep accurate records. In order to minimize your tax burden and maximize profit, you can deduct numerous expenses related to your trade, such as rent, supplies, equipment, benefits for employees, travel, and so forth.
If you haven’t yet started your business, you can also deduct startup expenses such as those associated with training employees, seminars, and advertising. You’ll want to keep track of your income and expenses all year long to avoid the end-of-the-year rush and to pay any required quarterly tax payments. To avoid any mistakes and penalties, consider hiring a CPA to ensure that you’re reporting accurately and taking all the eligible deductions.
Avoid Overspending and Unnecessary Debt
Traps that many small business owners fall prey to are overspending and debt. You should attempt to remain frugal and avoid unnecessary expenses. You may require a loan to launch an idea, purchase inventory, or buy equipment, but avoid buying more than you need. For example, don’t buy three computers when one will do.
To avoid frivolous spending, keep track of all your expenses and frequently review your records. That way, you can prevent useless spending and ensure that your income exceeds expenses. Make sure to do your research by looking for the best deal on everything, such as payroll and invoicing options, negotiating with third-party vendors, and taking necessary steps to reduce costs by making your business more efficient.
If you want to run a successful small business, you’ll need to be smart about expenses. Remember to be strategic, shop around for the best deals, stay on top of your taxes, refrain from overspending, and avoid unnecessary debt. By establishing a routine of comparing deals, keeping accurate records, and evaluating expenses, you will establish good habits, which will increase profitability and keep you out of trouble. Proper and thorough financial management will set you up for longevity and provide you the ability to survive a fluctuating economy.
SignalHarmony™ assists Small Business Owners with Business Consulting, Start-ups, Website Development, and Internet Marketing Services. www.signalharmony.com
ABOUT THE AUTHOR
Jim McKinley is a retired banker with a plethora of experience and knowledge earned from working in an industry that has seen a myriad of changes over the last 30 years. Jim has keen insight into the finance world and has made it a point in sharing his knowledge with those who are willing to listen and execute his advice. From simple banking to not so simple financial instruments, financial literacy, and home-buying, Jim's pretty much seen it all.