Controlling Costs for your Small Business
Regardless of the type of business you run, chances are costs have steadily been rising year over year. Larger enterprises are better able to absorb these rising costs, but caught between limited financial resources and the pressure to keep prices competitive, small businesses have difficulty absorbing these costs.
Cost management is the process of maintaining your business costs within a specified budget and limiting expenditures to meet financial targets. The best strategy is to plan ahead and focus on being proactive instead of simply reactive when it comes to managing costs within your small business. In the long run, being proactive saves your business even more money.
Identifying Areas for Cost Savings
For most small businesses, streamlining costs is a huge factor in achieving success and securing profitability. Look carefully at your business spending and ask yourself if you are encountering any of the following issues:
- Tracking where your money is going is difficult due to lack of detailed insight into your business financials
- Budgeting for your business is a daunting task and not having detailed budgets means you're improperly managing your spending
- Too much inventory is being held in stock and tying up much needed cash; and with fluctuating prices you stand to incur a loss when you finally do move some of the inventory
- You're not carrying enough inventory and incurring above standard costs to quickly acquire goods to meet your end customer demands
- Tracking of all your vendors is cumbersome and as such you are unaware of which vendors are providing the best prices and service levels
- Allocating costs among different projects is tedious so you are unaware of each project's profitability margin
So what is the Best Way to Reign In your Small Business Costs?
Sage 50 Accounting can go a long way toward helping small businesses accurately manage and contain costs. Having visibility into your financial business information, inventory and projects is a great way to keep costs under control. Here's how Sage 50 Accounting helps1:
- Discover where your money is going by drilling-down to underlying financial details
- Set up budgets and run reports showing performance against budget
- Reduce waste by easily tracking inventory and save money managing your stocking levels
- Review previous prices paid for items and always buy from lowest cost provider
- Easily allocate and isolate costs associated with different projects
Let's take a closer look at each of these in more detail:
To contain costs, you need an accounting solution that meets your business goals not only in the short-term but also long term. You need to accurately maintain historical accounting information in order to properly forecast future areas of expense. Sage 50 Accounting allows you to store from 2 to 100 years worth of financial information and, as your business changes and grows, separate versions of the software are available to give you the best solution possible for your business.
Get Insight into your Business Financials
With a real-time overview of your business activities, revenues, and expenses you can make more intuitive cost-saving business decisions.
Sage 50 Accounting gives you access to a 100+ template reports that you can modify for your specific needs. Many of these reports are extremely useful in uncovering or highlighting areas of expense that can be analyzed and further contained.
Or, using the Sage 50 Business Intelligence productivity add-on, a dashboard view of data is available to capture information from multiple sources in a unified, single-glance, display with the ability to drill-down to the underlying detail - allowing you to accurately see where your money is going.
A budget helps keep your business on track by setting out a detailed plan that predicts where your money is coming from and where it's going. Use it to spot cost management problem areas quickly. Having a solid business budget will enable you to spend your more of your energy on other aspects of your small business.
Sage 50 Accounting helps you quickly set up budget allocations using your earning and spending history as a starting point. If no historical data exists you'll want to be realistic and not underestimate your expenses or overestimate your revenue. Fixed expenses, such as rent or mortgage payments, and the variable or discretionary expenses are added to the budget. Most importantly, Sage 50 Accounting helps you track business actuals to budget, allowing you to see firsthand how your business is performing and emphasizes the areas that need special attention.
Budgets control spending, prepare you for what is to come, and help you manage and contain costs, to reach your set profitability goals.
Improve Inventory Management
You must keep track of the inventory or services that you buy and sell on a regular basis in order to improve cash flow and reduce waste. With powerful inventory tracking and management processes, Sage 50 Accounting helps you keep tabs on your inventory levels, manage business costs and analyze company profitability. If you know how many items are in stock and how quickly they are being used or sold, you can better control your inventory costs.
You can also use Sage 50 Accounting inventory price lists to set up preferred pricing and manage cost fluctuations. Price lists are used to control prices, by automatically suggesting the price of your inventory or service items when you create invoices. This also provides an easy and quick way of discounting prices for valued customers.
Manage Projects in More Detail
Project records within Sage 50 Accounting are used to keep detailed records of expenses and revenues associated with an event, a location, a contract or job performed for a customer. You can then review this information to ensure that work is being done on time and on budget without cost overruns.
Project information is extremely valuable when you want to determine if a specific business activity is profitable. It is also useful if you need to decide if a new venture, services or product is going to make money - you can compare the actual cost of a project to a budget estimate and spot potential cost overruns early.
More about Sage 50 Accounting
A respected software tool to help you manage and contain your cost outlays, Sage 50 Accounting is the right choice for your small business. This feature-packed and easy-to-use accounting software allows you to take control of your cash flow, and manage all your financial records including invoicing and billing - easily switching between English and French. It keeps your financial affairs in compliance with a full-time audit trail and automatic in-house payroll and sales tax calculations - all while keeping your costs in check. And Sage 50 Accounting allows you to do what you do best, run your business knowing you have access to a diverse line of accounting options as your business changes and grows.
With a valued reputation in the market, our offerings continue to make Sage 50 Accounting the #1 choice for accountants and small businesses in Canada2.