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How to Control Your Spending as a Business

Any business needs cash, or working capital, to buy assets and pay for planned or unplanned expenses. However, there is often no direct correlation between the money a business spends and the profit it generates, so business owners must be careful not to waste money on assets that the business doesn’t need, or paying uncompetitive prices for those that it does need.


Organic growth or, in other words, internal growth in a business that occurs through the use of its own resources, is more gradual than inorganic growth, through borrowing, merger and acquisition. As a result, spending on organic growth is easy to control, but, even so, failure to control spending can still reduce the amount of money available to develop the business or, in the worst case, lead to its closure. Business owners should prepare a monthly budget for at least twelve months in advance and stick to it. This should help them to avoid spending additional money as soon as they earn it.

Staff Costs.

By the time you factor in employers’ national insurance contributions, employers’ pension contributions and other costs, every member of staff a business employs is a high cost, regardless of their salary. In a growing business, it may be more economical to offer existing staff a pay rise to compensate for their additional workload rather than employing new staff. In any case, outsourcing business functions such as administration, accountancy, information technology and public relations can make business spending much easier to control.


Some businesses are actually doing away with permanent office premises in favour of working from home via Voice over Internet Protocol (VoIP), electronic mail and instant messaging. If face-to-face meetings between staff members are required from time to time, they hire an office in a central location for a day or two from a temporary office rental company.

Free Goods and Services.

Businesses that do need permanent office premises are becoming increasingly aware that they can reduce spending by obtaining second hand office furniture from websites such as Freecycle and bartering for goods and services with other businesses. Similarly, they may find that they can significantly reduce software costs by using free-of-charge versions of popular applications software, such as database, spreadsheet and word processing software, downloaded from the Web, rather than the commercial versions. Apache Open Office, for example, is an open source office software suite that stores files in an international open standard format, for compatibility with other common office software packages such as Microsoft Office.

Service Providers.

Without being Draconian, business owners should be aware of the money coming in and going out of the business on a daily basis and be prepared to challenge any spending. Similarly, they should review business spending on everyday goods and services, such as cleaning, electricity, gas and telephone services, insurance and so on, at least once a year and be prepared to haggle on price or switch to a new provider. Numerous websites exist to help business owners to switch from one provider to another with a minimum of fuss.

Post provided by Anthony, a British blogger writing on behalf of http://www.brookson.co.uk

small business small business spending
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