Monthly Archives: May 2016

Don’t Cut Your Expenses!

Shouldn’t a CPA be telling you to spend less and save more? Perhaps, but what if you are cutting back on your expenses too much and you are focusing way too much on not spending money?

First, just to clarify, I do not advocate spending money foolishly or spending beyond your means. I am referring to expenses that when cut, impact your business or personal life negatively, therefore your savings actually cost you more.

For example, a small business that is only marginally profitable may think that they need to cut expenses to increase their profits. Actually, it may increase profits temporarily, but at a huge long-term cost. They may reduce the amount they spend on advertising, let an employee go, or use less expensive, but inferior supplies and materials to service their customers. The impact is that because less money is spent on advertising, sales will most likely decrease. By letting an employee go, service will likely suffer, which may turn away customers. You will probably have to work more, which can cause more stress and be unhealthy for you. If you use inferior supplies and materials, it will bite you back in the future.

What is the smart way to reduce your expenses? Actually, if your business grows profitably and you do not spend your money unnecessarily or wastefully, such as with an expensive car that is not within your means, then it will not seem as though you have an expense issue. Expenses can only go so low, but sales do not have a ceiling.