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How can I take control of my overheads and cashflow?

When you first start out in business, you are usually very conscious of every cent you spend! Once your business is up and running though, reviewing your costs is often an area that is neglected. It's a safe bet that investing some time on a cost reduction plan would be an extremely profitable use of your time.

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This 3-part podcast and content series is brought to you by ANZ Business. Our expert guests bring you strategies and ideas which may help boost your business. To catch the full series, head to flyingsolo.com.au/anzbusinessDo you own a business? ANZ’s flexible solutions could help ease your cash flow pressures. Learn more.

There are two basic ways to keep your money box full:

  1. Make more money,
  2. Spend less money.

Maximising your income through effective sales and marketing, professional development and better business operations is often the focus of business growth, but losing site of spending and costs can be, well, costly.

For example, let’s take a business that operates as a retailer and distributor. They purchase products in bulk and then sell them direct to businesses. While volumes and revenues were high, pricing is extremely competitive and margins very tight.

In these types of businesses, once everything is accounted for, the bottom line can be that if the owners pocket three percent for themselves they were wealthy. But if they were down by a few percent then they were losing money fast. It’s a tiny margin of error between boom and bust, and controlling overhead costs is critical.

The point being that in any business tiny percentages can make the difference between Easy Street and Struggle Street. As sport coaches are often heard to say “look after the one percenters and the result will look after itself.”

But there’s a reason budgeting and business cost management is often overlooked. Because it’s often considered boring.

Who wants to sift through various telecommunications plans or bundled options? Or analyse, compare and negotiate on quotes from multiple suppliers? Who wants to spend time assessing the options available for leasing equipment?

Here are some things to consider:

Think long-term:

In some cases it is worth spending more money upfront to save money in the future. For example setting up an automated e-marketing system or buying an expensive printer may give you a better return on investment.

Play to your strengths:

If finding cost reductions really isn’t your thing, consider outsourcing this task to an accountant or move away from a low margin business.

Regularly review your supplier contracts:

Make sure you regularly review your long-standing agreements with your suppliers to make sure they are still competitive. There may be some opportunities to negotiate a better deal or switch suppliers.

While putting together a smart, tight and comprehensive cost reduction plan might ‘cost’ a few days in lost income, if it could add five percent to your bottom line year after year, it’s a safe bet that this business cost management exercise would be an extremely profitable use of your time.

ANZ’s flexible cash flow solutions can help you get on top of business

Cash flow can be hard to manage, with many circumstances outside of your control. ANZ can help you keep doing business, with a range of products that can be tailored to your cash flow cycle.

Contact ANZ to see how small changes could make a big difference to your business’ cash flow.

 

This 3-part podcast and content series is brought to you by ANZ Business. Our expert guests bring you strategies and ideas which may help boost your business. To catch the full series, head to flyingsolo.com.au/anzbusinessDo you own a business? ANZ’s flexible solutions could help ease your cash flow pressures. Learn more.

 

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