Once you have a clear concept of how much money it takes to run your business day to day, and even if you’ve advanced well into the operational life of your company, you can find ways to chip away at the costs of doing business. We encourage you to micromanage the money that flows out of your business in the earliest stages especially – not only does it improve the margins of your revenue, but it increases your degree of knowledge of every aspect of your business. As you grow, perhaps adding others to the team, you’ll be a smarter manager because of the familiarity you gained in the early days with these kinds of details and the best practices to handle them.
So what kinds of expenses are up for review? Any and all of them. Depending on what kind of business you’re creating, you’ll face costs for vendors, utilities, communications, supplies and many other things. Here we provide some perspective on how to look at your spending, and maybe cut expenses to make your cost-to-revenue margins a little fatter.
Never take a loss on items you’re shipping to customers. It’s important to include a premium on shipping because there’s also the packing and administrative aspects that have to be folded in. Having said that, don’t ever let a shipping policy get in the way of customer experience.
Using credit cards is something we all do. But the key is to pay down balances as quick as you can, ideally, paying each monthly balance completely to optimize your credit rating. And the impact goes beyond your credit rating – you can quickly rack up additional costs as interest at rates upwards of 18% accumulate. If you anticipate having long-standing outstanding amounts due, consider an alternative such as using cash that you can generate from home-equity or personal loans that come at much lower interest rates.