10 smart ideas to keep your budget under control—Ask the Experts
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April 10, 2017
|Question: I’m determined to stay on top of store expenditures this year. Do you have any suggestions to help keep me on track?
Answer: Good question! Sticking to a budget is something we struggle with, too. Here are some of the little tricks we rely on to keep ourselves on track, cut costs and increase our bottom line:
Take a negotiations course. Are you really getting the best price on everything you buy for the store? If you’re not sure, a course on the art of negotiation can help. Take a class at your community college, try a course that’s offered online, or download podcasts so you can learn new skills on your drive to and from the store.
Set non-negotiable budgets for every area of the store. Go through the list of expenditures you had in 2016 and review how much you spent in each category. Use your good judgment to choose an arbitrary figure that will become your 2017 budget. Let everyone who buys anything for the store know that this dollar amount is all the money there is to spend. Period. We’re willing to bet that each month you will be at or under budget. We always are.
Carefully check incoming invoices and statements to make sure they’re correct. Hold everyone on your staff accountable for any monies that are reimbursed. Insist on receipts for work-related travel, samples purchased, mileage, entertainment and other miscellaneous expenses.
Get a scale and weigh the packages that are delivered to your store. Check to see how much it would cost you to return the package to the sender, and then review the invoice to make sure you were charged the correct amount. Those little overages add up.
Pay yourself first. It’s easy to continue spending on your store until all your money for the month is gone, sometimes before you’ve had a chance to pay yourself. Consider yourself a critical supplier and pay your invoice first. Do this even when you know you can’t cash the check; it’s an important mindset to develop. Take it a step further and put away 10 percent for a rainy day. Or for your retirement.
Never mix business and personal funds because it can lead to financial nightmares. Make sure you have one account for your personal finances and another for your business finances. Always keep them separate.
Shop for lower interest rates. Sort through all the pre-approved credit-card offers you receive and look for one that offers a lower interest rate than your present card. Call your current company, tell them you’ve received a lower rate offer and ask for a rate reduction. If they’re eager to keep your business, they will likely say “yes.” Then ask them to waive the annual fee.
Open a line of credit with your bank. You don’t want to have to rely on credit-card advances when you need extra cash. Those additional fees, coupled with the higher interest rates credit-card companies charge, add up. A successful retailer we know habitually borrows $2,000 for 30 days and pays it back before it’s due. He has built a stellar reputation and a fantastic relationship with his bank.
Shop your associations. Most trade associations offer special member discounts on everything from freight management to office supplies. Log on to the “member benefits” sections of NRHSA, the HMA and other groups to see what you’ve been missing.
Speaking of association memberships, think twice about renewing each year just because they send you a bill. In 2016, we looked at each association we belonged to and opted not to renew many them, even the ones we had belonged to for years, and we saved close to $2,000. If you’re not active in the association—or they aren’t doing anything for you—you’re just throwing money away.
Realize that little dollars can add up to big savings. We saved a bundle when we dropped the service contracts on some office equipment. Most came with one- to three-year warranties anyway, and when they were out of warranty and needed servicing, it usually wasn’t enough to justify the cost of the service contract. Likewise with paid magazine subscriptions and online programs with yearly contracts that you only use once.
It’s your money, so be tough on how you spend it. When you adopt a cost-cutting mindset, you’ll cut down on all costs that don’t produce profits—and you’ll have more money for the things you really need.