Business owners are continuously seeking ways to innovate their company’s products and services.
But what about their spending?
While we’re hustling to acquire and satisfy customers, it can be easy to let other areas of the business run on autopilot — in many cases, this translates to dollars flushed down the drain.
As a virtual CFO, I’m always looking for ways to generate more return on investment for our clients. No matter a company’s size, it never makes sense to let dollars slip away when minor operational tweaks can save them.
In this blog, I’ll take you through five ways you can find money in your business today.
1. Audit your pricing
One of the most surprisingly neglected areas in many businesses over time is pricing. Owners take great pains to establish pricing at the onset, but it’s been well documented that entrepreneurs are known for underpricing their services and are often afraid of being considered too expensive. If you are not losing 15 to 20 per cent of new business based on pricing you are arguably leaving money on the table in unrealized revenue potential. Many businesses also do not have a regular cadence established for reviewing pricing.
When was the last time you raised your prices?
If it’s been more than a year, it’s time to be courageous and consider an increase.
You may be able to increase fees by as much as 20 per cent without having an impact on your adoption rate. When you decide to increase, make sure you give courtesy notice to existing clients, stay within the terms of your engagement and monitor customer response.
2. Optimize your currency conversion
When you have global customers that pay in non-Canadian currency, you could easily be spending more than you need to on currency conversion. It’s pretty common for internal support staff to go with the easiest conversion method, which is typically a direct transfer from your foreign account into your Canadian bank account. Many don’t realize they can save a few points on every transaction using a third party currency provider or by talking to your bank rep to request being set up with their best rates.
There is a little paperwork to complete and then you will quickly reap the savings. It can start with having your bookkeeping support staff investigate the best rates.
3. Cancel stale subscriptions
In the age of SaaS, it’s become easier to forget about subscriptions that you might not even be using anymore. It is very common for executives to sign up for efficiency tools with high hopes and then never fully implement them. Membership fees are another common spending area that become unconscious spending and may no longer be benefiting your business.
It makes sense to periodically survey your company’s spending history for charges you no longer need.
4. Conduct contractor reviews
Another recent shift has seen a move towards more contractors and fewer employees in many companies. When contractor relationships are established, they are often built around objectives and milestones.
When was the last time you reviewed your contractor agreements? If it has been more than a year, it’s a great opportunity to revisit the engagement to ensure you are maximizing your value.
A word of caution: if you terminate a contract and eventually circle back to that company or individual, you may find their prices have gone up as you bring them on board under a new agreement.
5. Go on a spend diet for a month
This can actually be a fun exercise and a way to free up cash to fund new initiatives or offset unexpected financial losses caused by revenue shortfalls. A short term spending diet can also lead to a sustainable spend reduction in some areas.
Challenge your whole team to participate.
Do you travel regularly? Opt for video conference as an alternative for one month. Do you host a monthly Lunch and Learn? Run this month’s event as a potluck rather than a catered meal.
Make this diet more meaningful by ensuring your staff understand your intention, so they can keep their eyes open for other ways you might be able to save.
Susan Richards is the co-founder of numbercrunch, a one-stop-shop for business financial services. The company offers cloud-based bookkeeping, and virtual CFO and controller services. To learn more or to request a quote, visit numbercrunch.ca or email firstname.lastname@example.org.