It is surprising how many businesses owners do not monitor the expenses incurred by their business and ensure they are getting best value for money when purchasing products and services. Many business owners are too busy working in their business and carrying out the day to day operations of what their business entails that they don't take the time to work on their business.
As time goes by your suppliers increase costs gradually and unless you analyse these incremental increases it is very easy to not realise that they have become expensive. I am not suggesting you should simply buy cheaper goods or services I'm encouraging you to analyse the expenses and see where the true value lies for you and your business. We all know cheap is not always best but likewise you don't always get what you pay for in life.
If you keep up to date bookkeeping records and run regular management profit and loss accounts and balance sheets this will help you track increasing costs and identify them at an early stage. Many business owners wait until the year end till they get their accounts from the accountant, this is flawed logic because not only could you have been incurring these higher costs for well in excess of a year but also you may not realise from year end accounts that individual costs have risen. For example you may have suffered a large increase in business insurance yet a decrease in motor insurance, so if you simply look at the insurance figures compared to last year the total may be very similar, as the total of the two hasn't increased but if you were to analyse this in closer detail as you process your invoices you would notice the difference and identify a possible cost saving.
Many people in business focus on increasing sales every time that they want to increase profits, however reducing costs can be equally effective, if not more effective at times.
Also consider what expenses you can eliminate altogether, for instance you might engage the services of a bookkeeper, however with bookkeeping training you might find that you can do this work yourself, or you might give your accountant a bag of invoices at the year end, can you imagine the savings if you gave your accountant a well-compiled set of bookkeeping records that you were able to produce yourself if only you had some basic bookkeeping training.
Free bookkeeping training http://www.thebookkeepingtutor.co.uk
By Derek Dale