A funny thing happens when your business makes money: you suddenly start to spend more of it.
Sometimes the extra spend is warranted and results in additional income, but other times you may come to realize that you’ve transitioned from spending only what’s needed to buying shiny objects “just because.” This thought process can also be applied to personal finances.
Shiny objects, as noted, can be beneficial to the bottom line, but it’s crucial to step back and see if your new expenses are for the greater good of the business, or if they are fueling your ego.
And when it comes to existing expenses, it is a good idea to examine them quite often. If expense X went away what would happen to the bottom line? Would revenue drop? Would revenue stay flat? Would anyone notice?
If you do find that expense X can be eliminated, that’s great. But don’t simply remove one expense to add another expense. Businesses do this all the time. If you keep net profit in mind you’ll remind yourself that cutting expenses + not decreasing revenue = larger net profits.