4 Effective Ways to Handle Small Business Expenses in 2024

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Wishing there were smarter ways to handle small business expenses in 2024?

As we move forward in 2024, it’s more important than ever for small businesses to handle their finances effectively in order to stay competitive and profitable. 

Whether you’re just starting out or have been in business for years, I’m sure this post will provide you with practical tips that will help you manage expenses in a better way.

Let’s get started.

Why Do You Need to Focus On Ways to Handle Small Business Expenses?

While small businesses are the backbone of the US economy, not all of them continue to thrive over the years.

When you examine the historical data on small business survival rate put up by the BLS (Bureau of Labor Statistics), the failure rates look like this:

• 18% within the first year
• 50% after 5 years
• 65% within the 10th year

Compounding the problem are the challenges that accompanied the recent pandemic and geopolitical crisis. Census Bureau’s survey shows most businesses have experienced a decline in revenue and productivity. 

That’s not all. 

The rising inflation and growing competition also mean that businesses need smarter ways to handle small business expenses. 

In fact, 73% of executives are either planning a cost transformation initiative or already have implemented it.

And, so should you.

4 Ways to Handle Small Business Expenses

Before looking at ways to manage small business expenses, ensure you have a business bank account so that your personal expenses are kept separate from business spending.

1. Track Business Expenses

The first step is to start recording and tracking your revenue and expenses diligently.

You can use a free template like this one from Google to start recording every expenditure and income on a monthly basis.

Of course, there are also expense tracking software that you can use that let you scan every receipt and invoice to organize expenses.

2. Identify Non-Essential Expenses

The next step is to identify which expenses are essential and which ones you can cut back on.

Tabulate your expenses and see how they compare against predicted spends to see the difference.

This will give you an idea of where you are exceeding and which areas to prioritize for cost cutting. Typically, expenses that aren’t completely necessary are ones you can cut back on.

3. Implement Cost Saving Measures

Once you know where to cut costs, you can start implementing ways to handle small business expenses. Here are some ideas:

Invest in Technology

Although this requires an initial investment, the right technology can result in significant cost savings over time. Here are some tools that can help:

• Data entry or inventory management can be automated which can save time and money on labor costs.  
• A CRM system and marketing tools can help improve customer relationships and reduce cost of customer acquisition.
• Video conferencing, email, and messaging apps can help reduce travel and accommodation expenses. They can also reduce communication gaps. 
• AI-text-video-generators are a cost-effective way to generate high-quality marketing videos.
• Digital signatures can help you save thousands of dollars each year related to document storage and handling. You can read the blog post on DocuSign alternatives by Attrock to know more about affordable digital signature software.

Negotiate with Vendors

Negotiating better terms and prices with your suppliers and vendors is one of the other effective ways to handle small business spending. 

• Research the market to understand what your competitors are paying for similar products or services.  
• Establish a good relationship with your vendor to make negotiations easier.  
• Offer alternative solutions, such as longer payment terms or a larger order size.
• Consider bundling multiple products or services together.

Improve Productivity

One of the important ways to handle small business expenses is to eliminate unnecessary tasks that reduce productivity and add up to your overall costs.

A recent study, for example, shows businesses spend an average of $25,000 per year per employee by scheduling unnecessary meetings.

If your company has 100 employees, the total wasted investment can amount to $2 million per year!

Streamline Marketing Costs

Here are some ways to cut your marketing costs:

• Invest in digital marketing channels that have a lower cost per lead, such as social media, video production, and email marketing.
• Encourage customers to refer their friends and family by offering incentives and by launching brand ambassador marketing campaigns. Another cost effective way to acquire new customers is to use affiliate marketing.
• Take advantage of free marketing channels, such as social media and search engines. In 2024, marketers are planning to invest in platforms such as Facebook, YouTube, and TikTok.

Be sure to optimize your social media presence with stellar content in the form of images and videos. You can also overlay images with an image editing software to make them more visually appealing.

4. Invest in Growth 

While cutting costs is important, it shouldn’t be the only objective. A Gartner study shows that indiscriminate cost cutting and knee jerk reactions can bring more harm than good.

A mere 9% of businesses are able to generate sufficient capacity for growth and innovation.

This is where having a growth mindset really comes into play. It’s about understanding that in order to thrive, a business must continuously evolve and invest in new opportunities. Which is why, one of the best ways to handle small business expenses is to invest in growth. Which is why, one of the best ways to handle small business expenses is to invest in growth. 

For the services industry, growing sales will mean increasing appointments and bookings. This is where investing in an appointment booking tool such as SimplyBook.me comes in handy.

This tool helps your business optimize bookings with features such as:

• Bookings from multiple channels
• Payment integration to accept payments
• A mobile app for clients for seamless booking.
• Calendar syncing

Over to You

Other than these 4 ways, clearing debts, setting up a savings account, and investing wisely can be beneficial to any small business owner. 

The key to cash excellence lies in developing a “cash-focused culture” where people, processes, and structure are in sync.

In addition to these methods, small business owners need to explore various frameworks provided by the government that support cost reduction. For instance, taking advantage of the employment allowance can significantly decrease your National Insurance contributions, freeing up resources that can be reinvested into growth strategies or innovation. Other than these 4 ways, clearing debts, setting up a savings account, and investing wisely can be beneficial to any small business owner. Finding the best savings account could provide you with more financial flexibility as it helps in reducing overhead costs by earning higher interest rates compared to regular accounts.

With careful planning, tracking, and managing of your small business’s finances, you can ensure that 2024 is a profitable year for your company.

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