What do you do when you do not have enough money to pay all your expenses? Should you reduce your salary to be able to afford your tax? As a small business owner, what are your options?
Doug Hoar from My Finance Partner gives some tips on answering these very commonly asked questions.
“This question is asked on a regular basis. Generally business owners feel that cutting costs is the answer but this is not always correct. There may be unnecessary costs in your business and these should be cut but one needs to be careful that by cutting costs you are not impacting your ability to grow and/or run your business. So often we find business owners pursue a cost cutting strategy only to find themselves still battling down the line.
When you start your company there is already a limited amount of costs in your business leaving little space to reduce costs further and successfully be able to run and grow your business. Often people also try find ways to reduce paying tax. As a small business owner you need to try and avoid pushing through a large amount of expenses through your business that don’t belong in your business. Check your costs and reduce any that are unnecessary.
With that said, it is important to focus on what you as a business are going to do to increase your income: It is key to put energy into this and focus on this. If you continue to put your focus and energy into cutting costs, you eventually will get to a point that you won’t be able to move anyway. Focus on growing your business and increasing your income”.
How do you grow your business with limited income available to grow your team?
“A common mistake is that many business owners look at what is happening right now and start making decisions around that. You need to invest against recurring, profitable business rather than a “bubble”. Make peace with outsourcing until that service generates a consistent income flow. Only then consider making an investment in machinery and/or people. Often we are asked how long do you wait until you make the decision to invest. The answer to this is unique for each business and industry.”
My Finance Partner can sit with you and assist with ensuring you are taking all into account and give you guidance in making these decisions.
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