In February of 2020 I made a shift in my business and stopped working from home. A mere weeks before COVID hit I moved into a private office space.
The main problem with this move (other than the pandemic)? It was going to push me beyond my allocated percentage for operating expenses.
I had to find a way to work the office space into my budget without putting my business (or my paycheck) in jeopardy.
In order to keep my percentages in check, I did an activity I call “Keep, Cut, Trim.”
Whether you’re trying to afford a new expense, or you’re trying to lower your already crazy OpEx percentage, this activity works!
Here’s what I did. I took all of my operating expenses and put them in one of three categories:
Keep– This expense earns generates more money than it costs and can’t be reduced.
Cut- This expense doesn’t generate any revenue or isn’t essential, so it can be eliminated.
Trim- This expense might generate revenue, but there could be cheaper options out there.
First, pinpoint the expenses that are essential to your business. This could be franchise fees, certifications, etc. These go in the keep category (make sure there isn’t a cheaper alternative out there first).
Next, try and find 2-3 items that you could cut all together. For me, Audible was the first item to hit the curb. Toss these items into the cut category (and then go cancel them!).
Finally, anything left goes into the trim category. This could be any online subscriptions, internet cost, marketing expenses, phone lines, etc.
Go through each item in the trim category and see if there are cheaper alternatives. If there aren’t, pick up the phone and call your current vendor to ask for a lower monthly fee! You’ll be amazed at how far you can get by making a phone call.
Once you’ve worked your way through the trim column, move the items to either keep or cut.
Congratulations! You’ve just reduced your spending.