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Is it Money Well Spent? 5 Tips for Evaluating Business Expenses

All business owners have expenses and most would say way too many.  The key is to spend those dollars on the right expenses that have the greatest potential to boost sales and make you more efficient.  To make the most of the money you spend, consider these 5 ideas to implement.

1. Consider annual renegotiations on contracts with suppliers.

Multi-year deals may always get the lowest costs.  This forces annual discussions to keep everyone competitive.  Of course this is extra work but it sure can pay big dividends.

2. Ask your customers opinion.

Getting customer input can have a lot of benefits.  It’s a great way to make sure your product mix is ideal and it is being delivered in the most effective manner.  Think about starting a client advisory group which would consist of 8-10 of your best clients, who you could run ideas and concepts by.  What you might see as a potentially unnecessary expense might be a huge value-add for your clients.

3. Automate and Outsource.

With technology changing so rapidly what tasks can be automated or subbed out to a third party source?  Create a list of all the areas that are frustrating or take too much mental energy and dedicate someone on your team to finding solutions to these items.  Some great, inexpensive resources for outsourcing are lessdoing.com, fiverr.com and upwork.com.  If you could have someone else complete a $25/hour task so you can focus on generating revenues of say $100/hour, it is well worth the investment.

4. Allocate funds to marketing.

When you are analyzing your business’ expense report, marketing should be one of the last places you cut costs.  Spend time on how you can differentiate yourself from your competitors.  If you do everything they do you will never stand out.  Lowering your prices just commoditizes your business so stand out, be different, add new ways to make your prospective client’s experience with you a “wow”.

5. Coaching.

Does your industry have experts that can help you solve problems in your business?  Hiring a coach to come into your business can help you get to the heart of the problem quicker and get the appropriate changes in place.  Always be sure to verify who you hire as in any industry there are those that are better than others.  Ideally these people will have performed these services with someone in your industry, whose business and admire you respect.  A great class on how to become a better entrepreneur is The Strategic Coach.  I’ve been a member since 1998 and it has been one of the major factors in our success.  Go to www.strategiccoach.com to learn more.

A simple shift in mindset while looking at the expenses in your business can be the key to the growth you desire.  If a given cost is bringing value to your firm through efficiency or creating revenue generating opportunities, it is in fact an investment rather than an expense.  Spend your money on investments  versus expenses and your return will be greater.

 


 

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