One dirty little secret some small business owners have is that they hate working with numbers. Small business owners especially enjoy making connections with customers, overseeing daily operations, and making decisions to improve their business. They do not, however, love managing business expenses and concerning themselves with numbers more than they have to. While numbers are an essential part of the game, there are several ways that you can manage your expenses to make more sound business decisions even if you hate numbers.
1. Maintain Good Business Records
Just because you hate numbers doesn’t mean that you can be lackadaisical when it comes to maintaining your business records. When you keep sufficient documentation for all your business expenses, you save yourself plenty of headaches at tax time. Keep receipts for your expenses and label them as necessary so you can quickly look at them to know what they are for and which expense categories to put them in.
Do yourself a favor and develop a system for filing your business expense receipts. Your system should save you time, so keep the files in a handy location and consistently do your data entries each month. If you work from home, be sure to create a dedicated space for your business expense files. You will need to be able to access your files if a question arises from your accountant or if you get audited, so invest in a filing cabinet and clearly label file folders so you know the month and year of each receipt.
Maintaining sound business records also includes knowing which types of receipts are most important to you. If you meet for lunch or coffee to conduct business, keep a receipt and record the attendees and purpose of the meal on the receipt itself. If you have out-of-town business travel, use your receipts to prove you were on business while traveling.
Anytime you use our vehicle for business, record where, when, and why you used it; then, reapply the percentage of use to your vehicle-related expenses. It’s also a good idea to keep gift and entertainment receipts separate. And, calculate the percentage of your home being used for business and apply the percentage to your home-related expenses.
2. Regularly Review Key Vendors and Renegotiate Often
You always will have business expenses, but you can save money by regularly reviewing key vendors. You may find that you can limit expenses by consolidating purchases. It’s also important to review key vendors regularly, but you especially need to do so if you have had a recent boom in growth. You may be able to save on purchases if you renegotiate prices and keep a close eye on how your prices could change if you alter your purchasing volume. It’s also a good idea to see whether local businesses in your area can combine to increase buying power.
Another way to get vendors to work in your favor is to get them to compete for your business. Make sure they know you are getting outside bids and that you are hunting for competitive pricing. You can reduce costs and lock in the best rates if you play your vendors off one another. And, you won’t have to compare prices for yourself if you get your vendors involved in offering competitive pricing.
3. Invest in Accounting Software
Fortunately, there are several cloud-based accounting software solutions designed specifically for small business owners. You can input your data from anywhere and at any time with this type of software, so you don’t have to worry quite as much about keeping receipts and other business records handy. You will get real-time insights into your business expenses with cloud-based accounting software because you can access it from anywhere whenever you’d like. This type of software also updates itself regularly, which saves you time and money. You might also consider investing in electronic payment software, especially if your business is online-only or you plan on accepting payments other than cash. Having payment software also makes it easy to keep track of receipts and invoices.
If you run a business but hate managing business expenses because you don’t have an affinity for numbers, you are not alone. Many small business owners dread dealing with business expense numbers, but you can make the task easier on yourself if you maintain good business records, regularly review key vendors and renegotiate often, and invest in accounting software in the cloud.