How to manage a strapped budget?

Hi Elizabeth, 

I agree that when the business grows, you are focused on all, but optimising expenses. When the things are settled and you do not grow so faster, then you start seeing things that need attention. And, the budget is one of those.

On a high level approach, I would make:

1. an analysis of the expenses Pareto 80/20. Which are your largest expenses on a monthly basis?

2. an analysis can some of those expenses be negotiated (suppliers, software etc). 

Note: By looking at your transactions you may notice there is something you are no longer using like a subscription service.

3. reassessing your business model- Are your expenses directly connected with the income you generate? Think about the costs that are fixed and are not the cost of goods/services sold. Can you optimise any?

4. checking the payment cycle of the customers. Is this what you have agreed on or slowly and gradually your customers have extended their payment period? Be sure that if that is the case- then your cashflow statement is definitely bleeding and you need to re-organise the payment periods (interest rate for delayed payments).

5. finding out why this is happening and is there any waste in your business process. A good exercise here is to map your processes and initiate a lean transformation journey (that is a long but worth it process)

DON'T DO:

I definitely do not think that cutting salaries or even head count reduction is an efficient and effective way to optimise your budget. You still need people (especially the ones who love their work and the product/service you sell) to work with and once you start growing again- it will be more expensive to hire and train new employees.

Hope that helps, 

Marieta

Admit that every entrepreneur faces the phases of having a strapped budget. You can lower the number of the situations by effective marketing efforts. Spend the money where it maximizes your ROI and stock the rest for other infrastructural and experimental expenses.