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Every quarter or so, it’s a good idea to assess your profitability. Not only will you want to examine your sales and expenses, you will also want to examine your business for any money leaks that you could plug to immediately boost your profitability.
It happens to all businesses, especially ones which are growing quickly. The owners of these businesses often find they’re wasting an enormous amount of money on things they forgot they were spending money on in the first place. This is why it’s a wise step, as part of your quarterly management process, to review your expenses.
Here are the places to look first when you review your expenses:
1) Recurring Memberships
We all do it. We see an awesome service that is recurring and we buy it. It might be a magazine, a podcast, a membership for content or anything else that we pay for but do not use. If you use it, then it’s worth it. If you don’t, it’s a money leak.
Don’t assume that you should just get rid of such a service, though. Try to remember why you signed up and if it’s still a good deal, put into your calendar time to use the products and/or services provided by the membership. If after 90 days you still aren’t using it, cancel it.
2) Ongoing Fees and Charges
Some fees cannot be avoided. You’re going to pay fees to use third party payment processing, and fees for many other things. But, you can research and find out what the lowest fees are to avoid paying too much. At least yearly, check the fees each service is charging and compare to the fees of another. For instance, bank fees vary widely. If you can save just 100 dollars a year on bank fees, that’s an amazing savings.
I just did this review for my merchant account and was able to save about $340/year, without any downside.
3) Duplicate Technology
As technology improves, you might find that you’re paying for multiple pieces of technology when you can just pay for one. A good example is invoicing software. You might pay for FreshBooks.com, along with GoDaddy Bookkeeping, and also use Basecamp.com. Do you really need all of these services individually? Or can you consolidate into one platform that does it all?
Sometimes, we forget that our businesses are growing and evolving entities. We won’t always need the same services forever, and, often, one service will become robust enough that we can cancel the others like it
4) Wasting Outsourced Hours
Have you hired a virtual assistant but you barely ever give them work? If so, this is a money leak. If you’ve hired well, your assistant should be able to do the work better than you, and faster than you too. Utilize them for what you’re paying them for. And use your newfound time to focus on bigger picture strategy or more income generation
5) Incomplete Tax Deductions
So many business owners try to do their own taxes, but with varying degrees of success. If you think you might be missing out on worthwhile deductions, consider hiring an expert to advise you on these matters, either ongoing, or at least to review your business expenses and possible deductions every six months. If you find a professional who can save you money each year, this is a worthwhile investment.
Finally, if you have a problem finishing what it is you start, you’re wasting a lot of time – and likely money too – on just messing around. If you want a real business, and not a hobby, take your work seriously and complete it as efficiently and effectively as you can. That, too, will plug a money and time leak which will improve your bottom line.