Ask anyone who runs a business, and they will tell you that managing their overhead is one of the most difficult parts. Keeping your expenses under control is vital to ensuring that your business can even survive, much less make profits. Consider these tips to help you save money on your contracting business expenses.
Plan Your Budget
In many ways, running a business is a lot like handling your own personal finances. If you don’t have a budget, then you won’t know if you’re spending too much. Creating a budget requires an analysis of your income and the expenses that you can expect. It’s an investment of time, but it pays off. By knowing what your expenses are at any given point in time, you can tailor your purchases to your available funds. That way, you’re more likely to have the money that you need when you need it. In the first year or two, you may need to revisit your budgeting on a regular basis, so that it’s always current.
Skip the Excess Fees
You know how gym companies make so much money? They persuade people to sign up for memberships that they won’t use. Then when you go to cancel it, you find that it’s complicated, so you let it run for a few months. You might be surprised to learn that there are lots of businesses that keep their finances up this way. Rental companies charge late fees or refill fees if you fail to return the equipment in the same condition. You can avoid all of these by investing the time to fill it up and return it on time. You can also do the same for other services that you need for your business. Sticking to a schedule makes all the difference.
When you were a kid, your parents probably had a lot of discussions with you about the difference between needs and wants. When you run your own contracting business, you might end up blurring those lines more than you should. And then in a lot of cases, that means you’ll have extra debt. Incurring debt for your business isn’t necessarily a bad thing, but you should be strategic about it. It’s easy to spend a loan or line of credit on equipment and supplies that are nice to have but not particularly necessary. It’s only when you’re paying interest on the debt that you realize it’s more than a convenience. Create a list of conditions under which you’ll be fine with going into debt, and you’ll save yourself a lot of money.
Shop Around for Services
Finance experts often say that people would save a significant amount of money if they were only willing to shop around for services. There are some industries that have made this clear. For example, if you wanted to save money on your car insurance, you could get quotes from different companies, and see which one gives you the best value. This practice also applies to the running of your business. If you need insurance or a rental workspace, it makes sense to consider a variety of options to figure out which one fits best. It won’t always be the one that charges you the least, but at least you will know that you’re making the best decision.
Update Your Inventory and Price Research
Quite a few of your business expenses relate to knowing what you have and understanding what you’ll need to pay to buy more. If your services require you to keep a regular inventory of supplies, you should research a reasonable inventory system that you can update regularly. That way, you know what you have and are less likely to order more than you need. When it comes time to order supplies, make sure that you have the most current price lists. Use this pricing in your estimates, where applicable. With the right information, you’re less likely to quote a price on a project that cuts into your profit margins.
Saving money while you run a business is a good way to keep it afloat for another year. To learn more about running your own contracting business, contact CSLS today!