Entrepreneur and business specialist JD Duarte provides insight into the key aspects of a startup that can help it control its costs in order to maximize its resources as it grows.
While increasing the number of sales may seem like the most important indicator for an entrepreneur looking to grow, gaining true control of all operations, procedures, and results is the most important step in ensuring short-, medium- and long-term success. JD Duarte, a lifelong entrepreneur and business expert, provides the most important methods that you must take into account to obtain total control of your business.
Sales control is a process that will help you manage, record and monitor everything that is sold in your business. In general, it is a way to know all the movements and actions that occur in the sales area and also to use that information for your commercial success.
“By having a sales control system,” explains Duarte, “you can avoid registration or calculation errors when making a sale. In addition, it will allow you to identify where to concentrate your strategies and sales force, as well as identify what the needs are and the next steps to take to increase your revenue.”
If part of your turn consists of the sale of products (either as retail, as products associated with your services or as products processed for final delivery to the customer), it is necessary that you begin to keep a detailed control of your inventory. This will guarantee the optimal use of your resources and with it, the success of your business.
This process will help you to manage the goods that are kept in storage and to keep a correct record of the entry and exit of the products in order to avoid problems of shortage or excess purchase, losses due to loss or expiration, or to invest unnecessarily in storage expenses.
Cash flow control consists of calculating the inflows and outflows of money in order to have control over collections and payments, as well as the financial books of the business. Keeping good control of these operations will help you identify the behavior of cash flow by inflows, outflows, investment and financing, as well as establish permanent control over them; also evaluate the reasonableness of collection and payment policies and measure the liquidity of your business.
Cost control is a fundamental process to guarantee the profitability and growth of all types of businesses, as it allows for identifying the outflows of money linked to the production of goods and services in order to design savings strategies.
The two main types of costs that occur in any business are fixed costs and variable costs. The former do not depend on sales, such as the rent of the premises, salaries or payments for services (water, electricity, gas, telephone). The latter, however, depend on the product sold, such as the raw material and the inputs used, among others.
By keeping good cost control, you can avoid losses of working capital, identify unnecessary purchases and improve your competitiveness in the market by establishing the best prices for both you and your customers, among many benefits.
Adds Duarte, “It is common to confuse cost control with expense control since both processes aim to design savings strategies. However, it is also important to know that each one is applied in different areas.”
While the first is related to the production of goods and services, the control of expenses is related to the administrative area and is a fundamental part of the operational part of the company rather than the generation of income. This includes payments in taxes, payroll, sales, office supplies and stationery, among others.
Having a good control of expenses will help you to carry out a better administration of your business, analyze your income and expenses over a period of time, know what expenses are pending and what invoices are missing to collect, to mention some benefits.
Financial control refers to the study and analysis of the real results of a company, seen from different perspectives and moments, in order to evaluate the fulfillment of the objectives, plans and projects of the business, the lines marked at the financial level, sales, profits, surplus, etc.
Although at the time of starting a business, it is common not to think about all the financial implications that it will bring in the short, medium and long term, having financial control from the first moment will help you gain security and confidence. These are key elements in order to carry out the correct functioning of all your operations and make effective strategic decisions.