When you run a small business, you need to be focused on your profit and loss statement. If you aren’t making enough money or are spending too much, you are going to be disappointed with your financial outcomes. Many small businesses do not have the luxury or large gross margins and ample sales. They need to make do with less capital while they grow. This means finding ways to manage your spending.
Look at Employee Spending
Often, the biggest problem areas for businesses aren’t the planned purchases that are vital to operations, they are the uncontrolled spending that happens on small items. For example, consider what your team is currently spending on travel and entertainment. Showing a client a good time is great, provided that it translates into sales. If not, it is just a money pit.
Furthermore, you may be surprised by how much you are spending on processing expense reports. Some research estimates that companies are paying more than $25 per expense report. Getting more control over what money is spent on which expenses can save you a lot.
Using Credit Card Program Controls
Using company credit cards can be very helpful. It gives you a level of visibility that may not be present with cash or reimbursements. It also allows you to set limits and set up approval processes. In short, with business credit cards, you get more control than you otherwise would have.
In some cases, you can get discounts by using credit cards. This is because you can more easily associate your purchases with a single source. In turn, this can give you more buying power. Furthermore, it is often easier to set up with suppliers through an online portal.
If you want to manage your spending, you will need to apply a few small business management best practices. These are some things to keep in mind:
- Visibility should be your top priority in organizing your spending.
- You need to have policy guidelines that are consistent and easy to understand and apply.
- Take advantage of spending control technology to give you more power.
- Review your spending from time to time and give feedback to your people.
There is a fine line between controlling spending and being authoritarian. After all, your people have the authorization to spend for a reason. Setting a clean policy and using the right tools can make this easier for you. Learn more about small business management practices and get on top of your employee spending.