Budgeting & Forecasting Q&A

One of the first questions I would ask is, are you profitable? Meaning, are you currently making more money than you are spending? If not, it isn't time to draw a wage. Keep in mind if you need to scale (add employees) they are the first to get paid and you are the last to get paid (as a founder / owner).

If your business is making a profit, do you have more than enough to keep the company profitable for 1 to 2 months and still have extra money left over? If not, keep not drawing a wage. If this sounds like a board game, you aren't far from the truth.

Lastly, if your business has met and exceeded both of those conditions it may be time to start drawing a wage. However, I would recommend starting small and gradually scaling it up to avoid having to ramp your wage back down.

If there is still too much "haze" around this topic, I'd recommend talking to an accountant or tax advisor.

Without knowing more about your business, this is almost impossible to answer specifically. However, a couple of generic things to look at:

• What are your fixed verse variable costs? Fixed costs are the costs you incur everyday, regardless of how many goods you sell (i.e. an office lease). variable costs are cost you only incur when you produce or sell a good (i.e shipping, production costs, product insurance etc). All things being equal, a higher proportion of variable costs can be beneficial as you only incur the costs when you are selling goods and generating revenue. So think how you can switch your costs from fixed to variable. obviously the trick is then to reduce these variable costs
• 
  
• Depending on your type of business, how much inventory to you have? yes you need to to meet your customer needs, but having excess inventory is a huge business cost! try and minimise your inventory holdings, while still meeting your customer needs
• Are you getting the best deal from suppliers? what is the relationship between your accounts payable and your accounts receivable? Are there lower cost suppliers or can you get better contract terms
• Have a good look at your key financial ratios. these will tell you where to look in your business to help reduce costs. How do these compare with similar companies in your industry (if you can find this out?)

If this is a real issue for you, i would suggest you talk to someone who can help with this, as you will need to get a handle on this. While there are many companies who work in this space (yes we are one of them) make sure you get someone who can not only help you in the short term, but also teach you what to look for moving forward so you can continue to monitor your business as apposed to someone just trying to sell you something. We also offer free initial consultations if you would like to discuss more.

1. Only purchase what you need, when you need it. Don't buy for what you will need 3 months from now or 2 years from now, unless you can really justify the expense.
2. Revisit competitive analysis on the supply vendors you are using. This is especially true if your current vendors are not meeting or exceeding your expectations. Compare other vendors to see if you could see potential savings. However, if you have great vendors in place, don't change from a great vendor to save a few dollars. You'll definitely regret it.
3. Try leaving the lights off for an hour or two in the morning. You may be surprised what you can get accomplished with natural light. This will help reduce your utility spend.
4. Use your additional space wisely. Do you have a bit more space than you are using but hesitate to down size to a smaller office? Rent space out to professionals or freelancers that can work remotely. Charge them a daily, weekly or monthly fee in exchange for a desk, wi-fi, coffee, printer use and potentially using meeting room space if they need to interface with a client or take a call.
5. If you can't figure out ways to save on your own, hire a cost-saving consultant to generate more ideas on ways to save.

I hope the above information is helpful.

This is a depend...

If you are spending money on your marketing and you are not getting a ROI Stop!

If you are spending money on your marketing and getting a high ROI - spend as much as you can.

It's all relative.

Hello, Jef

Thanks for your time it might be a good option " A longer term solution may be looking into installing solar panels if that is an option where you are." sound good

Also a good idea to turn off appliances @Hatty Bell 

Thank you guys!!
 
Keep safe always