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What's wrong with your business finances?

overworkedwoman23649135.jpgHow many expenses does your business currently have? Are you generating enough revenue to pay for your expenses? Sadly about half of all businesses do not generate enough revenue to pay for their expenses so they end up turning to credit cards and other loans to try and close the financial gap. Turning to credit is never a good option as it comes with high interest rates and you will end up paying interest on things that you should be able to easily afford such as your electric bill, rent, and other simple expenses.

What is wrong with your business finances and why aren't you making what you should? There could be a number of red flags that you need to uncover to see why your revenue stream is not working the way it should be.

The truth is your business IS profitable. There is evidence in that because you are still in operation, at least for now. The problem is that your costs are exceeding your revenue so instead of thinking "I need to make more money" you need to be thinking "I need to be spending less."

The one expense you cannot afford to cut it salaries. Some companies always turn to reducing salaries because it's a quick way to free up a good $30K a year or more. The problem is when you let go of talent, you other employees will be forced to pick up the extra work, without extra pay. Try to avoid letting go of employees if it is possible because there are so many other things you can do to limit your spending to allow your revenue stream to play catch-up.

Office Supplies
This is one of the biggest wastes a company will make with their money. Do you really need to order the name-brand gel pens or can you get by with the 99 cent package of 10 Bic pens? Sure it's only a few dollars but when you start looking at all of your office supplies, one simple trip to Staples that used to cost you $192 will now cost you about $140. A savings of $50 every month adds up to $600 a year, which is a pretty big deal for small businesses that need every penny.

Vendors
Sometimes small businesses get comfortable with one vendor and they don't push them to reduce their prices or to find out if they are being treated fairly. You always need to compare the rates of multiple vendors to see which ones offer the best product for the best price. If the vendor values you and appreciates your business, they will make an adjustment to their prices in order to keep you on as a client.

Insurance
We all know that insurance is expensive but there are a lot of insurance companies out there that just profit off you. Shop for new insurance policies every year. This doesn't include just your health insurance, you also need to shop for new insurance coverage for the business to protect you from liability, fire, etc. As you negotiate with insurance companies, you will be able to find one that can reduce your rates, even if you have to increase your deductible, the month-to-month savings may be worthwhile.

Product Pricing
If you aren't generating the income you need, take a look at your product pricing. What is your mark-up rate currently at? If you aren't making a decent amount of money off your products, it may not be worth it at all. As long as the product is worth the investment people are willing to make on it, they won't fuss over a small product price increase.

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