If you’re managing a business, you need to stay on top of your company costs. As your business grows, you’ll spend time managing more people and working with a growing list of customers. If you’re not careful, your business costs can explode. Use these tips to keep costs under control as you grow your business.
Understanding what you do
As your sales grow, so do the number of routine tasks you must complete each week. Say, for example, that you produce a unique line of women’s clothing. Your customers are dress shops and boutiques. If you grow from 100 customers to 300, consider all of the routine tasks that will increase at the same rate.
To control costs, you need to have a clear understanding of how you do routine tasks. These tasks include billing, shipping and customer service. If you know exactly how these tasks are completed, you’ll be able to keep your costs in control.
Assume that you’re documenting how you send invoices to clients, for example. You document who does that task, and the computer software they use. As your business grows, you can make smart decisions about how to handle the increased volume of invoices. Documenting your procedures can help you avoid hiring unneeded staff or overspending on more software.
Smart choices about technology
Technology can help you process transactions faster and keep your hiring to a minimum. For example, you can find apps that can eliminate paperwork and move documents to people quickly.
If you are a bank account manager and need to open accounts with you business or individual clients, you can use an e signature for financial services. This technology allows you to sign documents electronically and more importantly, very quickly. The document can also be sent to each interested party by email to be convenient without compromising the security of the signature attained.
Technology can help you manage the cost of processing payroll. As you grow your staff, the payroll processing will become more complex. You will have dozens of salary levels and hourly rates. Each worker will require a different level of tax withholding.
A payroll company can use your data to calculate the gross wages due to each employee and calculate all withholdings. You can link the payroll company’s processing to a company bank account. The payroll firm can submit pay to each worker’s bank account based on your instructions. Outsourcing your payroll may be your company’s biggest method of controlling costs.
Review all vendor relationships
The more business you do, the more vendors you may need to manage and pay. However, every firm has a small group of critical vendors that receive large payments from you. To control costs, take a look at these large vendors and see if their costs are reasonable:
· Legal fees: Take a look at the detailed billing from your law firm. A responsible legal firm should delegate work to lower-paid lawyers and paralegals whenever possible. If your law firm is billing the majority of your hours through expensive partners, ask them why work isn’t being delegated more effectively.
· Accounting fees: Your firm may require an outside CPA firm to perform an audit. You may also rely on an accounting firm to file your tax returns. Like your law firm, the CPA should send you a detailed hourly billing of the work they perform. They should also delegate work to lower-paid staff whenever possible.
· Insurance premiums: Most firms have a long relationship with an insurance provider. Your insurance firm needs to have an extensive knowledge of your business to provide proper coverage. However, it makes sense to occasionally get an insurance policy quote from another insurance provider that knows your industry. Getting a quote will ensure that you’re not overpaying for coverage.
When a business is growing rapidly, costs can get out of control quickly. Use these tips to minimize your costs as your grow your business.
