Читать книгу 19 Ways to Survive in a Tough Economy - Lynn Spry - Страница 28

When managing a business, in any type of market, it is vital to track expenses. However, in a tough economy, even the smallest financial waste can quickly destroy your profitability. The business owner and the employees have to understand that eliminating unnecessary expenses isn’t something they should get to when they have a free minute, after lunch, or when Simmons in accounting gets back from vacation. Any financial leak needs to be plugged as soon as it’s found, before it’s too late.

Most company owners value and understand the importance of having a complete financial picture of their company. Unfortunately, when the business is struggling, some business owners don’t take the time to review their company’s entire financial picture. Instead they focus on increasing profitability without cutting expenses. A business needs to be in a strong financial condition to be successful.

What does a successful financial picture look like during turbulent market conditions? From an expense perspective, the company is lean and tight, running on as little money as possible to sustain the success of the business. Ideally, at this point, expenses should be trimmed low enough that income meets or exceeds expenses. If you are trying to turn your business around during an economic downturn, this may appear to be very difficult. Often a struggling company has expenses that significantly exceed their income. By focusing efforts on reducing expenses instead of generating sales, the company will see improvements today, not six months from now. Plus, cutting an expense gives you a recurring advantage. A $500 per month expense you cut is $6,000 per year, whereas a $500 sale is only $500.

The bills must be looked at with a cold and unflinching eye toward reducing expenses and saving you money. Each business expense will need to be reviewed and serious consideration will need to be taken to determine what you can reduce, what you can defer, and what you can eliminate. Of course, all of your expenses cannot simply be eliminated. For each group of expenses, there will be very different methods to reduce the costs. This simple review is the beginning of turning around your business. After all, any money that you are able to shave off of your expenses will bring your business closer to success.

Lifesaver: If you don’t already have an accounting program, invest in one. Tracking expenses in a software program will speed monthly sales tax reporting and yearly tax filing. Further, it is easy to create clear reports of the business’s financial picture. If you are not comfortable with accounting, hire a bookkeeper or accountant to set up your accounts correctly.

Take special care to review any bills that you don’t pay yourself. You may find that even your most trusted managers are not as concerned about your spending as you are. When we reviewed our expenses, we were shocked to discover how high some of our basic bills had escalated. For instance, our store manager was an authorized purchasing agent of the company and he had the authority to order inventory and some other items. He was special-ordering French Vanilla creamers for the staff break room. While this cost was only $40 each month, costs similar to this were adding up and costing our company hundreds of dollars a month. After completing our review, these unnecessary expenses were removed and the company overhead reduced.

The first time you complete your review, you may find that your expenses exceed your income by an unexpected amount. When strong businesses start struggling, it is common for expenses to continue at record highs even when income is declining. Even Fortune 100 companies make this mistake.

If you find that your business is in this situation, the first thing you need to do — before you start expanding your operations, increasing your sales, and saving your business — is to reduce your expenses. Review all the items again and determine what you can reduce or eliminate. Each dollar that is spent without income becomes a debt that your business will have to pay off later. By eliminating as many costs as possible, you reduce the business’s operating expenses and when sales start improving, you will become profitable much faster.