The business world may be constantly changing, but effectively managing your expenditures will always be crucial to your business's success. When you reduce your expenses, your business will run more efficiently and have higher profit margins.
Staying on top of recent business trends and technological advancements makes it easier to keep your costs as low as possible. Here are some important ways to start spending less as we transition into 2018.
1. Use an app to set and manage your budget.
The days of logging your business's income and expenses yourself are long gone. It's much more efficient to choose a financial app that connects with all your accounts, including any banking and credit card accounts used with your business, to track the payments you receive and the money you spend. Popular options include FreshBooks, QuickBooks and Waves. These three companies offer both computer software and smartphone apps, enabling you to access your budget on any device.
A financial app helps you stay on top of expenses, find areas where your business could be overspending and make adjustments immediately. By using an app to track how much your business will get paid and how often, you're also less likely to run into cash flow issues, a common problem that sinks 25 percent of small businesses.
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2. Combine expense reports and analytics.
Thanks to analytics, you never need to do any guesswork regarding the success of an ad campaign, a landing page or any other moves you make to grow your business. Not only are analytics tools informative, they've become more user-friendly, even if you're not that technologically savvy.
Google Analytics provides information on all the traffic to your site, including where it originated, how long visitors stayed and what they did. You can also use it to view in-depth results of your Google Ads campaigns. The major social media networks, such as Facebook, Twitter and Instagram, have their own analytics to track engagement with your accounts and promotional campaigns.
By combining analytics with your expense reports, you can calculate the return on investment for everything you do. Then, you can expand successful campaigns with high ROI and reduce your investment in campaigns that aren't performing as well.
3. Minimize tax liabilities with smart deducting.
An unexpected tax bill can put your business in a tight spot financially, and this is a common issue among inexperienced business owners who aren't sure how much money to save for taxes. It's smart to save approximately 20 to 25 percent of what your business makes for taxes, but you should also use deductions to reduce what you owe as much as possible.
With all the methods available to track business expenses, there's no excuse for missing out on potential deductions. When you use an accounting app or put all your expenses on a business credit card, you'll have a record of those expenses to ensure you deduct the right amount and can verify those deductions if you're ever audited.
4. Hire freelancers instead of employees.
The United States is moving away from the traditional 9-to-5 and becoming more of a freelance economy. There were 55 million freelance workers by the end of 2016, which is over one-third of the workforce, and freelancers could outnumber non-freelancers by 2020.
Freelancers tend to command higher hourly rates than employees, but you can still expect to save 20 to 30 percent with them. That's because you won't need to pay anything for their retirement, health insurance or Social Security. You can also hire them only for specific projects, whereas with an employee, you'd typically need to provide a minimum number of hours each week.
Considering the cost benefits and the ongoing transition from traditional employment to freelancing, it's in your best interest to learn how to find freelancers now. Many freelancers have their own websites, which you can find through an online search. LinkedIn is another good way to connect with freelancers.
Running a lean business
It's easy to overdo it with the "spend money to make money" approach to business. Using money wisely is an investment, but using it carelessly is just wasteful spending. With 2018 approaching, it's the perfect time to take better control of your business's spending and increase your profit margins.