Is it possible to control expenses in a growing business? After all, entrepreneurs need to spend money to make money, right? Although there is no one-size-fits-all solution, there are crucial steps that every owner can take to ensure they have a handle on what they are truly spending.
- An owner should approve all variable expenses. When a business is small, anyone can purchase as needs arise. However, as a business grows, too many employees purchasing can quickly lead to overspending.
- Communicate your business strategy and financial strategy with your key people. No one is going to spend your money as they would their own. However, if you communicate the business and financial strategies to your key people, you are far more likely to get results that align with your goals.
- Monitor actual expenses against budget. That which gets measured, gets managed, holds true in this situation. If your employees are aware that you are measuring this and asking questions when expenses do not make sense, they will think twice about purchases.
- Limit the number of company credit cards that are issued to employees. When an employee has immediate access to spend company money, there is no incentive for fiscal control.
Although these steps may sound simple, in a business where family is involved or there has been a core group of employees from the beginning, implementation and enforcement can be challenging.
Entrepreneurs may also opt to employ an outside advisor to create, implement and enforce the necessary controls on expenses. mACCOUNTING assists growth-stage businesses with expense oversight, cash flow and a number of services that help to ensure the fiscal health of your organization.