When you first started your business, you meticulously tracked each expense and knew where every cent of your budget was going. Now, as your profits have grown, so has your budget — and your spending might be getting a bit out of hand.
By taking a careful look at certain business operations, you might uncover a few spots where you can easily make some changes and cut your costs. Eight Forbes Finance Council members discuss one area of your business that might be ready for a budget analysis.
1. CRM Systems
Many small businesses have customer relationship management systems (CRM) that are under-utilized. They default to using it just as a contact database, too busy to leverage the other embedded services, like email, voicemail and sales pipeline management. Give your CRM provider a call for a platform refresher, and delegate to one employee who'll own the broader employee adoption process. - Ivan Illan, Aligne Wealth Preservation & Insurance Services LLC
2. Inventory
Many business owners acquire too much inventory, thus tying up much-needed cash. Large inventories are a result of an overly optimist outlook. Additionally, small business owners often accept discounts from the vendor if the owner agrees to purchase a larger quantity. Small business owners need to run leaner inventory purchase strategies going forward and quickly turn current inventory to cash. - Darryl Lyons, PAX Financial Group LLC
3. Apps And Software Subscriptions
There’s a good chance you’re paying ongoing subscription fees for various online tools, whether it’s social media automation or list-building software. With more choices available than ever, it’s worth looking at whether there are cheaper alternatives or apps that serve many functions instead of just one. - Ismael Wrixen, FE International
4. Software Packages
Many services (particularly SaaS) that are critical to the success of a small business owner can also nickel and dime you to death. Be sure to monitor and audit these expenses regularly to be sure that you're not wasting funds on unneeded perks/packages. - Ryan Marquis, Plastc, Inc.
5. Payroll Processing
Small business owners have better things to do than perform bookkeeping duties, so many outsource this to payroll processors (ADP, Paychex, etc.). But these services can run upwards of $3,000 per year for a team of five employees. My recommendation? Consider online solutions like Intuit Payroll. Full-service outsourcing available for a team of five runs as little as $100 per month. - Erik Christman, Oxford Financial Partners
6. Hiring
Although it's important to hire as your business grows, don't assume it always has to be a full-time employee. While there's a time and place for full-timers, many small business owners will waste an entire salary on a workload that could be accomplished by a freelancer or part-time worker. Before making the hiring plunge, owners should always see if it's more cost effective and feasible to farm it out part-time. - Elle Kaplan, LexION Capital
7. Warehousing and Office Space
Many small business owners can look to cut costs by divesting themselves of brick and mortar venues used for warehousing, office space and other operational needs. Online-based businesses could allow employees to telework for efficiency and cost effectiveness. In today’s fast-paced and competitive marketplace, getting lean fast is the difference between thriving or just surviving. - Jacob Alphin, Rillhurst Capital
8. Insurance And Financial Fees
Review your P&C insurance. You may be able to switch providers and save money on your premiums. Check the fees on your merchant services. A reduction of just .25% of the processing fee could lead to big bucks in savings. You can also secure a free checking account with a bank to avoid wasted banking fees. - Justin Goodbread, Heritage Investors