Tracking real time expenses is the trick to avoiding nasty bill shock and serious cash flow woes.
As a business owner it’s easy to focus on the big issues – cash flow, staff and customer service. But focusing on small changes can make huge differences to your profitability, efficiencies and how your business is perceived. Here are some top tips:
1. Think green
Conserving resources is not just good for the planet but great for the bottom line, says Naomi Tosic, director of Sydney-based serviced office provider The Office Space.
The Office Space focus on sustainability, from the businesses they order goods from, through to ensuring there are ample recycling bins. They have also increased the efficiency of their utilities.
“We replaced our lighting with LED lights and put them on motion sensors so they switch off if people are out of the office for a time,” says Tosic.
“Upgrading equipment is also really important. By replacing an old air conditioner (which also required capital investment) we started to see an immediate change in our energy bills.
“We now see the benefit of this investment in reduced utility costs across the board.”
It is not only the bottom line that benefits, but also the company’s reputation with clients.
“If we are implementing positive planet practices then they feel good about where they are choosing to place their business,” she says.
2. Harness data
Cast your eye to utility bills and you’ll likely find opportunity to make a difference. Knowing how much energy you use is a simple start, says Ed McManus, general manager at Powershop Australia.
“A cafe might be thinking of installing more efficient heating or cooling, or new fridges and cooking equipment,” he says. “But to understand whether that’s worth doing, you need to know how much the electricity they use is costing on a daily and half-hourly basis.”
This knowledge can lead to action.
“With access to real time data, you can start to understand how much things are costing so that, if you make small changes to your business, you can assess what the impact is.”
Tosic says that access to real time data has allowed her business to work out where they can be more efficient.
“We can keep an eye on how consumption is tracking and identify why there might be blow outs from time to time,” she says. “That might be an air conditioning unit that needs replacing, or long showers our clients are taking in winter after riding to work.”
3. Know your small expenses and forecast
Keeping on top of expenditure can make a big difference to your business, Tosic says.
“Every month I sit with our accountant and review our business P&L,” she says. “We are able to look for anomalies in monthly spend compared to previous months and investigate them – it’s just so important to check the small details.
“We recently focused on our printing contracts and it turned out we were being billed at a higher rate than our contract, and for an extra machine that we didn’t even have on site!”
McManus suggests business owners track usage and forecast exactly how much you’re going to have to pay.
“It’s unacceptable for people to use a product for three months and then get a paper bill saying how much they owe. Then, if they don’t pay, they get another one with a threat to pay or else,” says McManus.
“It’s important that people know how much electricity is costing at any given moment so they can forecast how much they’ll be paying. It’s much better for cash flow and can help avoid nasty surprises.”
Visit Powershop to find out how to save money in your business through the small changes.
Written by: Jacob Robinson