Businesses come with a lot of expenses. As much as the aim of a business is to make a profit, the saying that goes, “you gotta spend money to make money”, couldn’t be more accurate. As a business owner, the breakdown of your finances is one of the most crucial elements that you need to get right. You have to know where your money is going as a business and whether it is being spent profitably.
Budgeting is the best way to know what your business is spending money on, what it should be spending on, and how much is being spent. Small businesses need to take book-keeping very seriously as it helps determine the business’s financial health. Without a budget, your business is at risk of spending more money than it makes or not spending enough to grow and market the business.
In this article, we’ll talk about tracking your expenses and better spending habits for a successful small business. We have a lot of ground to cover, so let’s get started.
Track your Expenses
Really, what are you spending more money on? This is how you find out. Though you have created a budget for your daily operations, have you stuck to it? There are unforeseen costs a business can acquire, so you have to be meticulous in tracking your expenses and following the money. There are five simple steps for a small business to track its costs:
- Digitize all your receipts with a receipt scanner.
- Use software to categorize and keep your expenses all in one place.
- Have a dedicated business bank account and card.
- Connect your bank account to your accounting software to automatically import transactions.
- Review and categorize your business expenses regularly.
Better spending habits
This asks, “what should you be spending your money on as a small business?” We incur all these expenses, and sometimes still, the business is not growing, not making a profit, and all you have to show are bills and payments to be made. As a small business, you cannot “chill with the big boys” just yet. Some expenses would not be beneficial to your business at this early stage, and in the same vein, there are others you absolutely should take on.
- Expense #1: Market Research
This is important because conducting market research helps your small business save money in so many other aspects. It enables you to find your target market, thereby making marketing efforts effective. It validates your business idea by showing whether or not there is a real need for what your business offers. There are so many advantages to conducting market research, so it is worth every cost.
- Expense #2: Branding
After you have a target audience in mind, branding helps you position your business to them. Branding gives customers an understanding of your business and why your product or service should be their preferred choice. It helps you connect with your audience and build a reputation with them. Early branding is important for small businesses going against competitors with substantial market shares. Also, it is a necessary expense as branding is linked to your business performance in terms of sales and profit.
- Expense #3: Social Media Management
Social media is a great marketing tool available to everyone, and small businesses need to take advantage of that. Social media allows businesses to engage and relate with their customers in real-time. Consumers are the heart of a business, and with social media management, your business can build a base of loyal consumers who rely on your business.
- Expense #4: Company Culture
Businesses should not skimp when it comes to building a company culture. Your company culture is vital to its growth and success; it is the personality of your business that shows from the inside out. A business is just a name; it’s the people that make up your business. Your employees’ happiness is vital and should be prioritized as such. Research shows that happy workers will give more to the business in terms of productivity which equals profit. Create a safe, friendly, and inclusive workplace for your employees; it doesn’t even cost a lot and would be totally worth it.
So, what do small businesses typically spend more on? Payroll and Human Resources. Paying employees is one of the leading expenses for a small business, and it covers salaries, bonuses, commissions, and profit-sharing. A close second was Inventory, Materials, and Supplies cost.
Small businesses need all the help they can get financially, including generating more income ‘effortlessly’. At BizVest, we offer products where you can save, invest and earn interest on your account.
Today we pose the question to you, “What are you spending more on as a Business Owner?” And how can we help in increasing your income? Visit www.bizvest.co and let’s chat.