When it comes to running a successful business, the aim of the game is to maximize profits. Let’s face it, if you aren’t turning a profit then you aren’t going to be in business for very long. The obvious answer when it comes to hitting those profit goals is to increase revenue, however, selling more isn’t all that easy, otherwise 9 times out of 10 you would already be doing that.
The more realistic approach to maximizing profits comes through controlling costs. Every business has costs, but not every business looks into those costs to see where they can trim the fat. It might seem a bit weird that some businesses don’t regularly review their costs, but the reality (particularly for small business owners) is that they are busy running their business and they don’t have the time to dive into the books.
Reducing Costs In My Business
Despite working a 9 to 5 job for a company, I am also a small business owner and it’s something that takes up quite a bit of time. So despite knowing that I should be looking at my costs, I don’t do it anywhere near as often as I should. Having said that, I have made some changes over the last few months that have saved my business a lot of money.
International Money Transfers
One of the big drawbacks to running a business that operates internationally is that at some point in time I need to get money back to me in my home country and that involves international currency exchanges. This might not seem like a huge deal, and it didn’t to me either when I first started out, but over time the transfer rates and the fees start to bite.
Because most of my business is based in the USA, what would happen is that I would need to buy inventory in US Dollars (USD), pay shipping companies in USD and ultimately get paid in USD, but because I am not a US citizen I couldn’t get a US bank account. This left me exchanging my local currency to USD and back again all the time. That would be fine, except the banks don’t offer you the actual exchange rate. In my experience they often take up to 10% of the true exchange rate and then make the transaction, then also have the nerve to hit you with a fee for their efforts.
After seeing that I was losing thousands of dollars a month on this, I decided to take action. I shopped around on sites like International Money Transfers and set myself up with a company that allows me to do business in USD and transfer money back locally only when I want to, and at a fair exchange rate.
The end result – my business is more profitable by thousands of dollars each year just by making this simple change.
Business Applications and Services
To aid in writing this article I was going through my accounts to see where my own expenses have been and some of the largest and most consistent are applications and services. What I’m talking about here is things or services that you buy which aid you in doing business. Some examples:
- Accounting Software
- Search Engine Optimization
It’s essentially all the things that you spend money on so that you can do business and make a profit. The problem for me was that not all of these things were making a positive return on investment. An example of this was my accounting software, I was paying over $50 a month for something I was using only 5% of it’s full capability – it doesn’t make sense! So I swapped it to a free solution and haven’t looked back, that’s $600 a year I get to keep.
Side note: Because I wrote this post, I found another $59 a month in savings for software that is now less useful than it once was, but I hadn’t cancelled.
Saving Money on Location Costs
Moving your business location isn’t something that established businesses like to do, however, one of my friends who I catch up with regularly is also a small business owner, and he has had some tough times for the last couple of years with his small business. Recently he has had to make some hard decisions about his business and has decided to move his physical store front a few streets away. He will now have less warehouse space, but he will save over $35,000 a year in rental costs.
Sure there will be costs involved with moving, but a saving like that is difficult to pass up, plus, he will now be working directly across the road from me. So I think he’s hit a home run with this particular saving.