Knowing where you want to take the business means having a clear idea about expenses: which costs can be trimmed and which must be maintained.
Control those expenses
One of the key challenges for business of any size, but particularly SMEs, is that of controlling expenses. It’s also one the daily challenges in our personal lives!!
Among the CEOs I work with I notice that those best at controlling expenses are very clear about their business strategy and have excellent financial records and systems in place.
Here are a few useful tips that should keep expenses down:
Clear strategy. If you are clear about the direction you want your business to take you will also have a clear idea of where you need to incur costs and what costs can be eliminated. Outsource where you will get a positive financial benefit. As a CEO I outsourced everything possible because I found that there a lot of opportunities for getting very competitive prices from consultants, and often great experience.
Get three quotes. Make this a company policy because getting two quotes may only show disparity between quality of product or service; three confirms the picture. Make sure quotes are like for like and in writing!! This sounds obvious but it is often overlooked.
As CEO sign cheques yourself, once a week-with invoices attached and signed off by your finance person. This may become tedious as your business grows but I can assure you it will be worth the effort!
Have clear policies about who can order to what level in the business-and require counter signatories if you feel that is necessary.
Have firm company policies about expenses such as travel: which agencies to use, what class, car hire, hotel ratings, etc.
Lead by example. As CEO you set the pace for how your people see spending in the business. It may be your business but how you conduct business spending is noticed by your team!
Don’t stop spending on marketing when times are tough and sales are down. Spend more in fact and spend less on other things!! Just make sure that your marketing expenditure is the most productive and sales focused it can be; so keep data on the source of business/sales.
Take note of businesses that run on a low cost base and imitate them where you can.
Profitability, not turnover, determines business success. Teach your team to think that way as well.
Banking. Make sure that you are getting the best bank rates and deals on everything: most service and product costs are open to negotiation, so do deals for quantity.
Recommend your suppliers to others. They will be more inclined to offer you either better prices or better service.
I have a personal rule when it comes to expenses. I sorting out my needs from my wants and give the needs priority. The same principle can be effectively applied to business!!
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