March 31, 2020

Find the Hidden Costs in Your Small Business

Small Business
Ronald B. Allen

How often do we see a small business that has lots of customers and lots of cash flow but less profit that should be the case? The answer is, all too often. The main thrust of your small business is to sell your products and services. That is where the main focus of a business needs to be. Unfortunately, when a business is successful in its primary focus there are details that are overlooked and here is where the hidden costs lie. How to find the hidden costs of your small business and increase your profits starts with good bookkeeping with clear and actionable reports. In the Kansas City area come and talk to Exigo Business Solutions.

Hidden Costs Eat into Your Profit Margin

To calculate net profit margin you will take all sales and subtract all expenses. Then divide that by total revenue. Small business profit margins can range from a few percent upwards to twenty and thirty percent. Obviously, businesses with smaller profit margins are more easily hurt by hidden costs. In order to ferret out those costs, you need accurate and thorough bookkeeping. And, you need insightful reports. At Exigo we encourage our small business clients to use the best software for small business bookkeeping and accounting which is QuickBooks. And we have them use QuickBooks Custom Reports as a first step to finding those hidden costs that are strangling profits. If your bookkeeper is not using QuickBooks and is not providing you with the reports you need, consider if you should outsource your bookkeeping, as doing might just pay for itself.

Intelligent Business Solutions

A business owner focuses on creating and selling products and services. This by itself can be an all-consuming task. It leaves little time and energy for checking out the details. And, unfortunately, by their nature, hidden costs reside in the details. Business intelligence is the term used for smart software that helps you spot business inefficiencies, take advantage of business opportunities, and stamp out hidden costs.

The fact of the matter is that business procedures that were state of the art ten or even five years ago are now outdated. Today you can network business conferences online with Skype for Business, use Receipt Bank to digitalize paper receipts, work in the cloud without compromising security with SmartVault, or make local or international payments without wire transfer fees using VEEM.

To see the hidden costs masquerading as normal business expenses you need intelligent business solutions like QuickBooks and intelligent advice from a state of the art accounting group in the Kansas City area, like Exigo Business Solutions.

How You Look at Profit Really Matters

How to find hidden costs in your small business is to look for them. You may think that things are going as well as they can with your finances until you take a closer look. A method that we use at Exigo Business Solutions helps many of our clients do just that. The method is called Profit First. This way of keeping your books allocates money for profit to a segregated bank account twice a month. Then the system requires that you use a tool like QuickBooks Customer Reports to get a handle on your budgeting and cash flow. It is in doing so that you find and eliminate those hidden costs. To learn more about how to find and eliminate hidden costs in your small business and especially how to use QuickBooks and institute the Profit First method, contact us at Exigo Business Solutions in the Kansas City area.

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