7 strategies to manage business costs in 2024

Know what you’re spending and why

Is inflation bumping up your business costs?

Most businesses are feeling the squeeze of growing expenses and taking a hard look at ways they can better manage costs. But how can you make sure you’re cutting the right costs? A long-term relationship with your accountant means you can get tailored advice on cost management. Here are some of the things your accountant can help you to explore.

1. Get clear on your outgoings

Step one for any business wanting to better manage costs is, of course, knowing exactly where your money is going. Are you spending on wages, software subscriptions, raw materials? Are these numbers increasing year on year? You might be surprised at where the money is going and find some easy ways to reduce your expenditure.

2. Review your pricing strategies and structures

In a climate where the cost of goods and services has increased for many businesses, it’s important to review your own pricing to check if your own products and services are remaining profitable and competitive. Talk to your accountant for assistance in modelling various pricing strategies and structures.

Inflation is 2024’s anti-hero

2023 saw the highest rate of inflation Australia had experienced in several decades. While monetary policy has reduced this somewhat, inflation continues to impact the costs of many goods and services.
Inflation is also putting pressure on Australian household incomes, which may impact sales and demand for some businesses. Whether your business expenses are for products or services, your accountant can help you understand the impact on your business and what measures you can take to manage spend in the current economic climate.

3. Get smart about AI

One way many businesses are reducing costs is through the use of technology, like artificial intelligence (AI). Now, while AI can’t (and shouldn’t) replace all your people, as there’s plenty of potential pitfalls, AI can be a strategic tool to help your team work smarter. If you’re struggling to find great talent in the face of low unemployment, when used well AI can help to streamline your operations with reduced salary overheads.

4. Forecasting is your friend

It’s one thing to know where your money has gone and where it’s come from. But what about what’s going to happen next month, next quarter and beyond? There’s a range of advanced data analysis and forecasting tools available that can help your business to predict future performance as well as any likely cost changes. You can then work in partnership with your financial advisors to act on those insights.

5. Time to get chatting with suppliers

Regardless of whether you’ve been working with suppliers for the long term or if it’s a new relationship, it’s always a good idea to keep a close eye on what you’re being charged. Can your suppliers offer bulk-purchasing discounts or preferred rates for upfront payment? Is your current supplier still offering the best products and value for money?

Can you be proactive about tax to help manage costs?

Tax liabilities can have a big impact on a business’s bottom line, especially when it comes to managing cash flow. Working with qualified tax professionals can help you to:
  •       Identify tax incentives to reduce your liability
  •       Be strategic about purchases for tax deductions
  •       Explore tax credit schemes.

6. Cost monitoring is for every day, not just EOFY 

Just like a puppy isn’t just for Christmas, cost monitoring is something businesses need to be doing all year round. Talk to your accountant about systems for keeping vigilant on costs and cash flow, like regular reporting cycles or the creation of a dashboard with a traffic light system.

7. Protect your growth goals

As the adage goes, you need to spend money to make money. But this doesn’t mean all spending is good spending. Smart cost management is about knowing what to spend money on, and the right costs to cut (and it’s not always the biggest one). Just like buying something only to get a tax deduction isn’t good business sense, cutting a big expense to maximise bottom line impact isn’t always the right choice. It’s important to invest wisely for growth, and your accountant can help you to make an informed decision.

Take the guesswork out of cost management

Cost management is complex, but staying on top of spending is a crucial element of running a successful and financially fit business. Knowing your numbers - and what’s behind them - is essential. But you don’t need to figure it all out on your own. Having a team of accountants on your side that understand your business and the broader economic environment can make all the difference.

Nail your budget and keep spending focused on the right things with expert advice. 

Ask for a callback from Scotts Chartered Accountants.