If we try and analyze the reason behind failed small businesses expenses, very likely the factor that plays the biggest role as being ineffective is – expenses management.
Money is the most important part of any small business and in order to guarantee that your business survives long enough in the harsh and overly competitive market, is to make sure that your company usages available resources in an organized manner.
Small business owners must be aware of the different ways to allocate the available budgets so they can pay for different expenses. In the same manner, they must also figure out ways to cut expenses where appropriate in order to increase the profit.
In this article we’ve decided to discuss the different ways in which small business owners can keep an eye on their expenses and categorize them.
1. Keep Separate Accounts
One of the most important thing for small business owners to realize is that they have to keep their personal expenses separate from the expenses of the business. At first glance this sounds easy, but it is often a bit difficult to implement in practice.
The easiest way to do this? – Get two different bank accounts. Opening a separate account just for your business might seem to you like an extra expense on its own at first, but it will greatly help you in the long term.
A separate business account will also help you a lot with record keeping of the business. By keeping a separate business account, all of your business transactions will automatically be compiled at one place.
2. Using Envoice to Manage Small Business Expenses
Keeping proper records and documentation for your small business expenses can save you a lot of trouble. No matter how small the expense, if it is related to your business, you must ask for a receipt and keep it in a separate file.
Also, if your business is related to the sale of any particular item, in that case you must issue invoices to your customers and keep a copy for your own record.
Envoice is a online invoicing software that can help you in generating customized invoices for your customer. The benefit of using our tool is that it automatically keeps a record of all the invoices that you issue to your clients.
If the revenue you generate is based solely on billable hours, Envoice has the option to attach documents to the issued invoice with the hours spent working. It has a robust invoicing feature that allows you to create custom invoices (add your business logo, for example), email them to your customers and accept online payments using PayPal, Stripe, Square etc. (see our full list of payment providers here).
Take Envoice for a test drive to check it out for yourself. You can use the tool for free during the first 15 days. After the trial ends, you will need to sign up for a paid subscription to continue using it. Plans start at $12 per month.
3. Control Overhead Expenses
Controlling and monitoring overhead expenses is another very important step that many business owners fail to acknowledge on time. Overhead expenses can greatly reduce the efficiency of your small business model by overburdening it.
Small business owners often have a limited budget and they need to be sure that they are utilizing it in an effective way. Having a fancy office or aesthetically pleasing environment is something we all want, but very often increases the overhead expenses and that won’t generate any revenue.
By using energy efficient devices and utilizing all the space available to you, you can significantly reduce your business expenses. Co-working space is also a nice concept for small businesses which can help in reducing these costs.
4. Choose Organic and Low-Cost Marketing Techniques
When budgets are low, marketing might be the first of your expenses you look to cut.
We know that traditional advertising methods are costly and hard to measure. But, small businesses have never had greater access to cost-effective, trackable marketing tools.
Marketing is essential for any business to survive and thrive, but choosing the correct tailored marketing strategy is a must when you have a limited budget. One of the best marketing techniques for small businesses is email marketing.
Another saying worth mentioning is that even the best marketing in the world can’t save a bad product.
Meaning, your product should be able to advertise itself. The only way you can achieve this is by making it remarkably good in its initial phase, and subsequently in any other phases with constant improvements. This way your customers will end up recommending it to their friends and colleagues.
5. Use Prepaid Credit Cards to Organize Deductible Business Expenses
Prepaid credit cards are a very useful way to stay on top of business expenses. If you have a number of employees that incur travel and other business-related expenses, issuing them a prepaid credit card so they can pay for those expenses, would be a smart move.
There are a countless of benefits of using prepaid credit cards, such as:
–setting spending limits by person, expense category, merchant and time period;
–turning a card on or off at any time;
–being able to set alerts based on currency amount, type of expense, merchant etc.
By using prepaid credit cards access detailed spend reports that can be filtered by person, merchant or amount.
Prepaid debit cards are one amazing alternative to traditional bank accounts. A lot of them offer the same features as a checking account: online bill pay, mobile check deposit and direct deposit – without the overdraft fees.
The Balance website made a summary of the 7 best prepaid debit cards of 2019 analyzing their core features and perks (some even have sub-accounts with their own prepaid cards).
6. Utilize Business Credit Cards to Organize Deductible Business Expenses
Business credit cards are another potential way to streamline your business expenses.
In the same fashion as prepaid cards, you can have access to detailed reports that can be filtered by merchant, items purchased and credit card holder. You can even earn cash back on just about every purchase that you make.
Just some of the benefits of using business credit cards:
–setting up alerts for a specific dollar amount or type of purchase made
–detailed statements for each card available online to review at any time
–you can connect your credit card account to an invoicing software like Envoice, and get pay issued invoices fast and easy.
If you want to choose the best business credit card for your needs, a detailed list for 2019 has recently been published on The PoitsGuy.
7. Protect Your Business
Each small business requires its own level of protection, but you may want to consider getting an insurance or establishing an LLC or an S-Corp. Having an LLC or S-Corp allows you to separate your brand identity and finances from your personal finances.
Let say, if you ever had to undergo any legal issues, your personal property and assets would not be liable. So, make sure to renew any important certifications or licenses you need to remain compliant by adding it to your calendar.
Protecting your business is the best thing you can do for yourself to ensure any financial issues in the future may get affected by it and it doesn’t pour into your personal assets.