Every business has ordinary and necessary business expenses. From website hosting to equipment leases, the cost of doing business will vary based on your industry.
Yet, many companies have cost savings buried within their expense sheets that they aren’t aware of. Sometimes it’s an auto-renewing subscription that no one is questioning. Other times it’s paying too much for supplies.
But the reality for small business owners is that when you reduce business expenses, you can increase your wealth creation to plan for retirement. Too often, retirement planning is something that business owners put off for another time, like when the business reaches a milestone or when the business owner has more time.
However, wealth creation is not something you need to put off any longer. Working with the wealth creation experts at Yeager Sherburne CPA can help you focus on important financial matters to get more out of your business.
Our 4-step wealth creation program starts with reducing expenses by tracking monthly business expenses. We’ll give you insights into how to do that and its impacts on your wealth creation.
Financial Assessment
Cutting costs in business means understanding finances in a profound and meaningful way. Our team of experts does a thorough financial assessment to get a baseline idea of money in and money out.
During this assessment, we’re looking for the following financial burdens on businesses.
- Profit leaks
- High operational expenses
- Lack of systems
- Cash flow issues
- Other undetected anomalies
One key place we often find unnecessary or excessive expenses is on a business credit card. If you have recurring payments set up, they’re most likely on your business credit card, renewing without you knowing.
Reviewing Your Profit and Loss Statement
Within your profit and loss statement, we can often identify expenses that are pulling down your net income. Some companies struggle financially even though they have great sales numbers. That’s due to high expenses or a poor understanding of customer acquisition costs. While these expenses might be necessary, cutting back in less profitable areas could be the winning formula to improving your net income.
As we analyze your profit and loss statement, we’ll look for declining profits, sales and marketing spend adjustments, wages adjustments, and increases in accounts receivable. All these items tell a story that helps us improve your operations to help fund your retirement planning.
Once we’ve thoroughly vetted your profit and loss statement, we’ll compare it to industry standards. Each industry has different expectations for profit margins. If your profit margin is below the industry standard, we’ll identify why and help you work your way toward an optimal profit margin.
Optimizing Your Cost of Doing Business
One of the fastest ways of improving your profit margins is to reduce expenses, which can improve cash flow and create additional funds for personal wealth creation.
Want to learn more about the other three phases of our wealth creation program? Download a worksheet that will walk you through each step to increase your business’s personal wealth creation.
Have questions about this information? Schedule a call for a free assessment and consultation with John Yeager to learn more about how to reduce common business expenses.