In her column for New Business today, Badger has some great, practical tips for entrepreneurs having trouble controlling their outgoings.
First up: don’t rely on out-of-date information. "I recently had a meeting with a business that had been doing very well but which had seen a 40 per cent decline in turnover," she says. "When I asked about costs the owner produced accounts from 2007-08. She was working to the same costs as two years ago, even though they had fallen because she was selling less."
Badger recommends including dividend, VAT, corporation tax and national insurance when working out your breakeven point. It may put pressure on cashflow but, as she points out, "These are the basics you should know before you set up a business."
Badger checks her bank statements regualrly to control costs in her own business, the Ruth Badger Consultancy. "I always aim to have no more than 12 direct debits going out and if I don’t know what something is, I cancel it,’ she says.
Finally, never agree to a discount blindly. Always check your profit and loss account to ensure the price cut is a viable option for your business. "Not knowing your breakeven point risks you being a busy fool," Badger warns. "If the price is too low, I’ll say that I just can’t do it. Some of the best deals I’ve done have been the ones I’ve never done at all."
For more tips from Ruth Bager, check out the whole column.
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