There are many types of overhead costs for small businesses, including insurance, administrative fees, professional expenses, licenses and permits, property taxes, utilities, rent payments, office equipment, and more.
While these costs are essential to the running and success of your business, they don’t have a direct effect on your profits. So, costs you can gather alongside overhead costs include:
- Accounting fees
- Advertising
- Insurance
- Interest
- Legal fees
- Labour burdens
- Rent
- Repairs
- Supplies
- Taxes
- Phone and internet
- Travel expenditures
A straightforward way to reduce these overhead costs is to reconsider the office space your company needs. Business owners are guilty of renting commercial spaces that are much too large for their companies needs. So instead of signing that new lease consider other options such as renting flex Office space with a variety of options such as coworking space or virtual office.
What is cash flow management? And why is it essential for my business’ finances?
Cash flow management is the difference between inflows and outflows. In short, it’s the amount of money that comes in and out of your business.
Think of it as a water tank. Water comes in at the top and drains out at the bottom. To keep your tank nice and full you want to keep that cycle continually moving, with more water coming in than going out.
Improving your cash flow not only makes it easier to plan and budget allowances for your business but allows you to handle the daily fluctuations within your company efficiently. It’s vital because it later becomes the payment for things that make your business run: expenses like stock or raw materials, employees, rent and other expenses. Positive cash flow means your business is running smoothly.
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From staying on top of accounts to extending lines of credit, there are several ways to improve and increase your business’ cash flow, including:
- Pricing - lift your prices, focus on profitable revenue streams and provide more value for customers.
- Volume - increase your customers, expand into new markets or develop new products/services.
- Accounts receivable - invoice earlier, follow up frequently and reduce payment terms.
Creating a high positive cash flow and perfecting the above areas can become even better for your business and will allow you to make new investments and further grow your business.
