The clarity and direction you derive from analyzing financial statements is powerful. The problem is, most small business owners struggle to make any sense out of these documents. Profit and loss statements, balance sheets, cash flow projections…oh my! It’s all so confusing—especially to the right-brained side of the entrepreneurial world that would rather do anything EXCEPT analyze numbers!
This is where you come in. Your number-crunching ninja powers are something most of your clients simply don’t have. If you really want to knock your client’s socks off, dig into their numbers for them and show them what they can do to keep more of the money they’re working so hard to make.
To get you started, we’ve compiled this list of 6 things you can look for in your client’s statements to help them reduce expenses:
1) Borrowing Instead of Buying – Do your clients lease equipment? What about a company vehicle or the office building they’re in? Whenever possible, encourage them to buy what they need instead of leasing it. As you well know, leasing is almost always more expensive and it doesn’t allow your clients to enjoy the tax benefits they get when they own and something depreciates.
2) Excessive repeat expenses – Are your clients paying more than necessary for some things because the price includes features they never use? For example, if they rent an office space with a gym, but they never work out, chances are, they’re wasting money. The same holds true if they’re in a shared workspace and they pay for the right to use the community kitchen even though they eat out every day. What about that expensive CRM they invested in at the last conference they attended because it sounded so irresistible? If your clients are paying for the “deal” that includes e-commerce functionality that they never actually use, they’re doing themselves a disservice. Look through all of their expenses and share a list that includes what you think they can let go of.
3) High interest credit cards – Credit unions often have irresistible offers that allow people to secure very low-interest loans. If your clients have racked up a lot of credit card debt with high interest rates, consider telling them to put a low-interest lien on the car they own instead. With good credit, they can secure loans for outrageously low rates. In fact, we recently saw an opportunity to secure an auto loan at 1.4% for five years. When your clients take advantage of something like that the savings can really add up!
4) Small orders – Do your clients regularly order office supplies or software licenses? Ordering in bulk will save them money over time. They’ll spend more upfront but their cost per item can be far lower, which means they’ll be able to keep more of their income in the long run.
5) Hiring Instead of Outsourcing – Employees are expensive. In addition to salaries they pay to retain them, your clients also pay for equipment, worker’s comp, vacation and sick days, health benefits and so on and so forth. As small business owners, chances are they could save a lot by outsourcing more and hiring less. Of course they are required to follow IRS regulations when it comes to how they work with 1099 consultants vs. W-9 employees; however today’s business culture has never been more accepting of remote workers. Encourage them to take advantage of it and save.
6) Paying too much tax – Advanced tax reduction strategies help many business owners save hundreds of thousands, even millions of dollars each year. Encourage your clients to make (and keep) regular appointments with you throughout the year so you can brief them on the latest and greatest tax savings opportunities. After all, if our President-Elect can take advantage of them, your clients can, too!