The general rule of running a successful business is to control costs, increase revenues and maximise profits.
This is particularly true for small businesses, writes Devan Bishop, an accountant with HLB Mann Judd.
Of these, controlling costs is often the most straight-forward option, and a good one for businesses to focus on before considering revenues and profit.
After all, there is no point in increasing revenue if the funds are just being wasted on unnecessary business costs.
Here are five ideas to getting started on reducing costs
1. Administrative costs
Managing paper is time-consuming and expensive. Go green and save on paper, print and storage costs by storing documents electronically.
2. Social marketing
Websites, social networks and LinkedIn can be very cost effective marketing tools. Look at using such online alternatives to supplement or enhance more traditional marketing approaches.
For example, use LinkedIn to promote a client event, or Twitter to communicate news about the business.
3. Accounting systems
Cloud bookkeeping solutions such as Xero and Quickbooks online simplify accounting tasks and provide timely management to help better manage resources and costs.
This makes particular sense for businesses that do not have the resources to employ internal accountants.
4. Inventory and suppliers
Review inventory life cycle and minimise slow moving stock on hand to reduce overheads. If you don’t have adequate inventory management in place, the risk of obsolescent stock increases and the added storage and carrying costs increases.
Take advantage of supplier discounts for paying invoices early. Building a good relationship with suppliers will also enhance opportunities for future cost negotiations.
5. Tax bills
Take full advantage of any small business tax concessions available such as the $20,000 immediate asset deduction.
A review of fixed assets schedule may also identify items that can be written off or deducted for tax purposes.