How to Prevent Overspending Within Your Business
For many people, running a business is one of the greatest thrills of their life. There’s nothing quite like the satisfaction of building something from nothing and watching it grow. It’s not for everyone of course because along the road to success there are going to be pitfalls and plenty of them. Even the most ostensibly successful entrepreneurs sometimes tumble and when they do it’s because they’ve lost their grip of the balance sheet and somewhere along the line spending on the business has started to outstrip profit and once that trend sets in, it’s a helter skelter ride to the bottom. You can never take your eye off the bottom line, even in the midst of success you might be unwittingly sowing the seeds of disaster, so here’s some suggestions for good practice and a healthy balance sheet.
Obvious, yes, but the better you do it the safer your company will be. Budgets are essential tools to help you organise and plan and reviewing them regularly is crucial. Err on the side of caution, wildly optimistic budgets may make other people feel good, but they can be profoundly unhelpful.
Planning means looking at short, medium and long term. It means being aware of developing trends and being prepared to modify your business accordingly. No one can predict the future but it’s your job to ensure that no developments in your field of enterprise catch you unawares.
Monitor your cash flow
Cash flow is never constant, and you need to watch it like a hawk. Accumulating too much stock, overlong payment terms or bad debt, overspending on inessential equipment or over expanding the workforce can all cause problems. Be aware of the problem before the damage is done.
Use prepaid company cards for employee expenses
Giving employees a company credit card to use for expenses is fraught with danger. The card can be lost, stolen or hacked or the individual can run up expenses way beyond what is acceptable. With a prepaid card the recipient can only spend what has been loaded onto the card, which means that you can easily differentiate between senior and junior staff. Prepaid cards are not linked to a bank account so they cannot be hacked and if your staff need to travel abroad, they can be loaded with a currency of your choice. Most importantly, prepaid cards enable you to track expenses in real time via software or an app and if you wish to freeze the card you can do so without the need to freeze an entire account.
Always. If it’s not one of your strengths get someone who is good at it. There is always a better deal to be had and it’s always worth the effort finding it.
Find cheaper alternatives/eliminate waste
Whether it’s going paper free, recharging batteries, reducing your energy bills or investing in new, more efficient technology there is always money to be saved. Technological developments which can save your business money are coming thick and fast so review this regularly.