To boost your bottom line you have two options; you can increase income or you can decrease expenses. It sounds simple enough but you’d be surprised how many small business operators fail to appreciate the significance the second can have.
Management of SMEs must continually be looking to control costs as a means of helping the entity’s profitability. Whilst sales growth is very important for a business, business owners should also be just as diligent in the control of costs.
A dollar saved as a cost goes directly to bottom line profitability. Many businesses have found that by embarking on a strict cost control review, they have achieved the same profitability improvement that would otherwise have had to come from a substantial increase in sales, which might not have been available to the business.
In future posts we’ll look at some of the ways a business can help themselves to control costs. Often it’s the ‘little’ expenses that creep up on you… bank charges, stationery, etc.
EVERY purchase (from the big capital expenditures to the everyday consumables) should stand up to the challenge of asking yourself “Do we really need it?” Is it going to add value or merely add to our costs?
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
Christie has written 811 awesome articles for us at Alan Lewis Accountants – BLOG
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