Home Business Balancing Business Expenditure – 3 Things You Must Know
photo of man using calculator to calculate business expenditure

Balancing Business Expenditure – 3 Things You Must Know

Business is not merely about receiving money for your goods and services; certain unavoidable expenses also come with it. Of course, you should try to cut back on expenditure as much as possible, but make sure you’re not also cutting back on quality.

Balancing income and expenditure is a delicate art. You want to minimise your outgoings, but at the same time, you don’t want to scrimp on stock holdings and jeopardise a potential opportunity.

Here are a few things you should understand about business expenditure to help with this tricky balancing act.

Know Your Current Income and Expenditure

It may seem obvious, but you need to know what your business’s current state is in terms of income and expenditure. You should be able to baseline your costs, such as salaries, rent, insurance premiums, etc. However, others will fluctuate depending on demand. It is the fluctuating costs that you should concentrate your attention on, so knowledge of your stock inventory is critical.

You can stay on top of your inventory by using a Point-of-Sale (POS) system. A PoS will update your inventory as soon as a sale is made. They will also record useful data that can be used to support sales, marketing, and ordering aspects of your business.

Keep a Grip On Employee Expenses

Travel, accommodation, and subsistence expenses are inevitable if you need your staff to move around the country to support your business. It is satisfying to know that you can trust your employees to treat the expense system with respect. However, there will always be someone who tries to push things beyond the limits. To avoid surprises and potentially difficult HR situations over expenses, you should set clear guidelines and limitations on employees’ expense spending.

photo of business owner checking through business expenses

Control Departmental Spending

Similarly, you should have some restrictions and limitations placed on departmental spending. Budgets for travel, awards, entertainment, and so on should have limits set on them. 

Setting clearly defined budgets and ensuring that everyone sticks to them will allow you to plan your spending across the whole business. Neglecting to budget correctly will lead to financial surprises and knee-jerk corrective action.

Sensible Spending

It is critical to invest in your business and spend money to have the best impact. However, choosing the right areas for investment is not always an easy task. 

One of the keys to deciding on the right spending is to use customer data and marketing feedback. Understanding such information and using it correctly can reveal potential areas for investment. Once identified, you can decide how much money you want to allocate to each. 

Even when you have identified potential areas for investment, maintain a policy of sensible spending. Don’t throw everything into a new venture or territory. Only spend what you can afford until you ascertain the level of risk involved. Once you are comfortable with that, you can increase your spending accordingly.


Spending is an inevitable part of any business. Hopefully, understanding the three principles laid out above will help you balance your business expenditure.

Related Posts