Reduce Your Business Expenses — We Will Show You How
Revenue is up but your bank account tells a different story. Here are the real reasons NZ business owners stay busy but stay broke — and what to do about it.
You are working harder than you ever have. The phone is ringing. Jobs are getting done. Invoices are going out.
So why does your bank account look like that?
This is one of the most common conversations I have with business owners. Revenue looks fine on paper. But there is nothing left at the end of the month. No buffer. No profit. Just the feeling that you are running to stand still.
The good news: there are usually only a handful of reasons this happens. And once you know which one is yours, it is fixable.
You Are Confusing Revenue With Profit
This is the big one.
Revenue is what you invoice. Profit is what you keep after every cost is paid. They are not the same number — and a surprising number of business owners run their business off the revenue figure without ever properly tracking what it costs to generate it.
A business turning over $800,000 with $760,000 in costs makes $40,000. That is a 5% net margin. After tax, the owner might take home less than a full-time employee on the minimum wage.
The fix: know your gross margin percentage. Know your net margin. If you do not know these numbers off the top of your head, that is the first thing to fix.
Your Prices Are Too Low
Underpricing is endemic in small business. It happens for a few reasons:
- You set your prices years ago and have not reviewed them
- You are scared of losing work to cheaper competitors
- You are not confident in the value you deliver
- You have never actually calculated what you need to charge to make a profit
Here is a useful test. Take your total revenue for the last 12 months. Subtract every cost — materials, subcontractors, wages, rent, software, vehicle, insurance, everything. What is left? Now divide that by the hours you worked. What is your effective hourly rate?
For many business owners, that number is confronting.
Pricing is not just about what the market will bear. It is about what you need to charge to run a sustainable business. If your prices do not cover your costs and leave a margin, you are not running a business — you are running a very stressful hobby.
Your Costs Have Crept Up Without You Noticing
Costs do not usually blow out all at once. They creep.
A software subscription here. A price increase from a supplier there. A staff member whose role expanded without a proper review. Insurance that renewed at a higher premium. Fuel. Materials. Consumables.
None of these feel significant on their own. Together, they can quietly erode a margin that was already thin.
The fix is a proper cost review — going through every line of your P&L and asking: is this necessary? Is this the best price available? Is this delivering value proportional to what it costs?
Most business owners who do this exercise find at least $5,000–$15,000 in costs they can reduce or eliminate without affecting their service at all.
You Are Doing Too Much Low-Margin Work
Not all revenue is equal.
Some jobs, clients, or products make you good money. Others barely cover costs. The problem is that when you are busy, it is easy to keep taking on work without asking whether it is actually profitable.
A tradie who does residential maintenance at $80/hour and commercial fit-outs at $120/hour is not running the same business twice — they are running two businesses with very different economics. If they spend 80% of their time on the lower-margin work, their overall profitability suffers even if they are fully booked.
The fix: know your margin by job type, client, or product line. Focus your energy on the work that actually makes money.
You Are Not Paying Yourself Properly
This one sounds counterintuitive, but hear me out.
Many business owners underpay themselves — or pay themselves inconsistently — and then wonder why the business feels profitable but they personally feel broke. The business looks fine on paper because the owner's labour is not properly costed.
The flip side also happens: owners draw too much from the business without accounting for tax, leaving a GST or income tax bill that wipes out what felt like profit.
The fix: set a proper salary or drawings structure. Make sure your tax obligations are accounted for. Treat your own labour as a real cost of the business.
You Have a Cashflow Problem, Not a Profit Problem
Sometimes the business is actually profitable — the timing is just terrible.
You complete work in October. You invoice in November. The client pays in January. Meanwhile, you have wages, rent, and supplier invoices due every month.
This is a cashflow problem, not a profit problem. But it feels exactly the same from the inside.
The fix: tighten your payment terms, invoice faster, chase debtors earlier, and build a cashflow forecast so you can see the gaps before they hit.
What to Do Next
If any of this sounds familiar, the first step is getting clear on your numbers.
Not just your bank balance. Your actual margin. Your cost structure. Your pricing. Your debtor days. The full picture.
Most business owners who sit down and properly review these things find at least one significant lever they can pull — and often several. The difference between a business that struggles and one that thrives is rarely about working harder. It is almost always about working on the right things.
If you want a fresh set of eyes on your numbers, that is exactly what we do. A straightforward conversation about where your money is going and what you can do about it.
Book a time at eastmure.co.nz or call us on 03 366 5070.
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Written by
Peter Eastmure
Peter Eastmure is a Christchurch-based accountant and director of Eastmure & Associates. He advises small businesses, medical professionals, and property investors across New Zealand on tax, compliance, and business strategy.
