So your business is going along nicely. You’ve got a strong pipeline that you’re successfully converting and you’re continuing to maintain your current client base. It’s now time to look at how you can keep this forward momentum to ensure your business is profitable.
An important way to do this is to look at what you’re spending money on. What are your business expenses and are you getting the best bang for your expenditure bucks?
But keep in mind, sometimes a reduction in your expenses may not pay off immediately and you will need to think strategically and longer term about the cost and the benefits. A cost benefit analysis is a great way to do this, particularly when you’re considering making a new or large purchase decision.
So, what’s the best way to take this task on?
- First of all you need to understand your options
What happens if you keep doing what you’re currently doing versus doing ‘something’ new? Are there real benefits in making a change? What are the opportunity costs of maintaining the status quo?
- Think about how much will it cost to do that ‘something’ new
Are there initial set-up costs in the first year only or are there annual and ongoing fees?
- And what are the actual benefits of doing ‘something’ new?
Is there potential to earn additional revenue by investing in that ‘something’ or will it free up your time, allowing you to improve or expand your business?
- Will doing ‘something’ save you money?
Can you streamline an aspect of your business if you go forward with your decision?
- How long before revenue covers cost?
Think about how this will impact your business over time in terms of costs and financial benefits/revenue. Will you make money by making the change—a return on investment, and if so, when?
- Look at the costs versus the benefits
Include those benefits that may be a little more abstract, the intangibles—things that make the job easier, less stressful, or more straight forward for customers etc.
You don’t need a special tool or software to run this process; you just need some time to think, two columns and some careful consideration to help you weigh things up. It can be a quick and easy process when you get into the swing of it!
Next time in PaySmart News we’ll delve into the individual areas of your business you should be looking at to save more money.