Controlling Expenses

Decreasing expenses is one of the ways to increase your business’ profits. The other ways are to increase sales and to increase prices, but this page is going to focus on some tips to decrease expenses.

Expenses can be fixed or variable. Fixed expenses are the same from month to month, while variable expenses fluctuate. You may think that fixed expenses can not be decreases. In reality fixed expenses can be controlled, but you must do this through negotiation, preferably before the expense is first incurred. Negotiate up front for insurance, equipment, and rent because usually you will not be able to renegotiate until the lease is up.

Variable expenses are a bit easier to control. Some tips to control variable expenses are the following:

• Encourage all employees to be cost conscious (recycle and don’t waste)
• Look at ways that you can save on utilities, travel, and insurance
• Avoid using a miscellaneous account because it makes it very difficult to track what the money was really used for
• Be sure employees are really working for their wages and salaries
• Promote a good work ethic
• Promote a team player environment
• Address employees who are slacking- if they don’t shape up, show them the door
• Be sure that your company’s policies and procedures are clear and understandable
• Eliminate repetition of work by clearly defining work assignments - you don’t want two people doing the same thing