If there is one thing to remember when running a business, it is to make a profit.  If the business is not making a profit, or worse, operating at a loss, the business will surely close down and be bankrupt sooner or later.  Profit is the difference between the sales and the expenditures.  To boost profit, you have to either maximize sales, reduce expenses, or both.  Here are some ways you can manage the business expenses to maximize profit:

Invest in a Cash Flow Management Program

If you have a small business, it can be costly to hire staff just to manage the cash flow of your business when you can do it yourself, albeit with a little help.  Instead of paying monthly salaries for an accounting staff, you can opt to hire the services of a bookkeeper or an accountant only on critical financial seasons.  In the meantime, you can invest in a cash flow management program that will enable you to track your inventories and expenses.  If your business engages in sales or manufacturing, it is important to manage the products that the business produces and the products shipped out to clients.  Expenses, such as manufacturing expenses, labor expenses, and postage expenses can be tracked to make sure that they are not going beyond the budget.  By tracking specific items of expense, you can check which ones are the most cost effective and which ones can be trimmed down.

DJ & Jones doing expense reports by Toby Simkin, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic License.

Trim Down Expenses

In managing the business’ expenditures, it is vital to know what the items of expense and their corresponding values are.  Some of these expenses are staffing expense, overhead costs, office supplies, inventories, and vendors.  Staffing expenses include the costs for labor such as salaries, allowances, and bonuses.

To minimize staffing expenses, remove redundant positions and offer telecommuting plans with your employees in lieu of transportation allowances.  Overhead costs include expenses for leasing office space, as well as energy costs.  Telecommuting can also allow you to save in office space by allowing a percentage of your people to telecommute.  Renegotiate lease terms with the lessor by offering longer contracts.

To save in energy costs, consider installing motion-triggered lights and energy-efficient heating or air conditioning machines.  To minimize office supplies, practice a paperless environment in your office.  Internal memos and short communications can be done through electronic mails, instant office messaging programs, and other forms of digital communication.

Furthermore, you can lower business expenditures by revisiting vendor contracts.  Offer longer contracts for a bigger discount.  Check other vendors as they may be offering lower prices.  Use these lower prices to renegotiate your contract with your current vendor.  Also, update your inventory.

Check which products are cash cows and which just sits on the shelf for a long time.  You may want to consider investing more on the cash cows and suspending production of those not contributing to sales growth.  By eliminating products that are not making profit, you save in production costs and even maximize profit on additional production of profit-rich products.