Cutting expenses

The "experts" say the economy is beginning to turn around. I have yet to see any change for the better in the current state of the economy. In fact, I am seeing more and more individuals and small businesses hurting financially. What can be done to help these individuals and businesses?

For individuals, it is somewhat more difficult to say what should be done to weather the storm. One thing for certain is to cut unnecessary expenses. Many individuals (and families) have cable TV. One way to cut expenses is to drop your cable subscription for the time being. This will give you (your family) a little more money for paying those necessary expenses.

For businesses, again, it can be difficult to say what should be done. Many times, business owners tend to act before thinking things through, and they start cutting back on expenses such as payroll, accounting, and marketing. In some cases, business owners want to cut all accounting expenses, or cut them so much that the accounting services being provided become worthless because the accountant no longer has enough information to be able to provide accurate and timely advice to the business owner.

When times get tough, that is not the time to stop advertising, and certainly not the time to get rid of your accountant and/or bookkeeper. It may be okay to cut the hours of the accountant or bookkeeper, but do NOT tell the accountant or bookkeeper to stop entering information into the accounting system. Every single expense needs to be tracked, along with income and payroll expenses. When the accountant does not have all of the expenses and/or payroll information, but only has the income, the accountant cannot let the business owner know where the business stands financially.

In slow times, many businesses cut back on advertising efforts, sometimes completely cutting all advertising and marketing expenses from the budget. This is the wrong time to totally cut advertising and marketing expenses. Cutting advertising and marketing during slow times will prolong the downturn in a business. It will take longer for a business to recover, if it can recover, when all advertising and marketing efforts are cut from the budget.

Admittedly, advertising and marketing can be very expensive. However, if a business stops advertising and marketing to its customers and potential customers, these customers (and potential customers) will think that the business is unable to survive the storm, and they will go elsewhere.

If you need help determining how you can weather the storm, MasterType Accounting & Business Services, P.C. can help. Contact us at mastertype@mabspc.com.