Episode 22: How to CHOP Down Administrative Costs in your Start-Up
The #AskaCFO series is a weekly Q & A with CFO James Vanreusel, CE and Founder of Vanreusel Ventures. In this series James answers questions ranging from corporate finance, FP& A, Investor Relations, Professional Development, Business Growth, Fundraising, M& A, and more.
One of the most important things to remember when running a start up with limited resources, is that every expense is on the chopping block every month. As we all know we live in the world of subscriptions and it is very easy to let them get out of control. If you want to keep expenses flat, to maximize profitability, you want to take some of the money from elsewhere, to invest in areas that are really going to help you as you scale. To do this, you need to go through your p&l, your chart of accounts, even all the all the operating expenses.
When costs are high and revenue is uncertain you should sit down each month, and look at every single expense and ask yourself three very important questions:
1. Is this expense necessary to function as a business.
2. Is it doing its job? Is it helping you grow?
3. Can I get it cheaper?
Starting with the #1 Key book is the best way to get your feet wet , and get expert strategies to help build a solid financial foundation.
Three Steps To Save Your Business Money
It’s important to know that you have control over your company’s expenses, and there are three ways you can do that so that you have more money to put into areas that help your business grow:
Go over your company’s expenses every month and seeing what’s working and what isn’t. That way, you don’t have to continue spending money on things that do not help your company grow. Go through your chart of accounts, even all the operating expenses and the expenses above the line, and ask yourself if you need this expense?
Maybe you still want to spend money on some product or service to help your business but find it a bit too pricey for your budget. There are a few things you can do to try and make it work for you:
The trick is to get creative. Think out of the box! And sometimes, you just have to bite the bullet and spend a lot of money for better quality. You may want a higher quality auditor as your company grows in revenue, so use this opportunity to find the money somewhere else.
Doing this will allow you to focus on spending money that helps you grow!