Manoj runs a clothing retail store close to Thrissur Round. He anticipated a spike in sales during Onam, so he stocked up on more than 500 pieces of traditional mundu and ethnic clothing before the festival.
However, unexpected rain reduced footfall, and that led to 30% unsold inventory after the season. The bank interest on his working capital loan kept rising while these unsold goods sat on shelves. Not a Happy Onam for him, right?
Rashmi owns a small digital agency that serves travel companies in Kochi / Alappuzha area. She advertised a set of digital marketing solutions on social media in June for ₹50,000, but she didn't check which campaign generated the most leads. It turns out that the majority of clicks were from non-Kerala sources and did not result in significant conversions.
The same pattern recurred the following month because her team was too busy generating ads without analysing the results. ₹100,000 spent with no discernible return on investment.
Adil’s software start-up operates from a 1,200 square foot office on Mavoor Road, kozhikode. After Covid many of his staff members have continued to work from home – coming to office only a few days each month.
He still pays rent, electricity, and accompanying costs for the underutilized space. That is an unnecessary expenditure of almost ₹25,000 per month.
The business owners in each of these instances was spending money without a clear plan or feedback system. Expense management becomes essential—not just as a way to reduce costs, but to develop the habit of making better choices.
Being frugal is not the goal of expense management. It all comes down to knowing where you money is going and why? What benefit accrues to the organisation from each spend?
Let's look back at the previous examples to see how they might have been handled differently. Manoj could have checked festive season sales data for the last few years or asked a few fellow retailers to understand trends in footfall – and most importantly being a Keralite he should have been aware of the impact of the weather on sales – especially rain, which although good for the land is a big dampener on sales, except for umbrellas and raincoat. Just joking!!
Sales analysis is essential for retailers. He could also have reduced inventory by taking the stock in smaller batches – most suppliers would agree to this. As a result he would have had much less unsold stock and less interest, maybe nothing, to pay on his working capital.
Rashmi could have avoided unproductive spending if she had halted campaigns that weren’t delivering expected results. The budgeted could have been redirected to the ones that were generating good leads from the target group. A dedicated landing page could have been able to capture the right kind of leads and helped to track conversions.
In Adil’s case the office could have been shifted to a co-working space or a smaller office with lower rent. If he still wanted to keep the space on Mavoor Road, he could have sublet some space or released a portion back to the owner to reduce his overheads. A little bit of thought, pre-work and proper review of actions could have led to better control over inventory, marketing spends and spend on infrastructure.
Here are a few ideas worth considering:
- Track all expenses monthly – not just what you pay, but why you pay it.
- Always ask: Is this expense essential, return-generating, or negotiable?
- Talk to your suppliers, landlords, or service providers. Many are open to flexible terms if you ask.
- Invest in simple tools to track inventory, bills, and campaigns – you don’t need big software, just a clear view.
These examples show that mastering expenses isn’t rocket science—it’s about developing the habit of reviewing, questioning, and optimizing spends. Even saving 10% each month can make a big difference over time.
(Share your experience: If you’re a business owner in Kerala and you’ve faced similar challenges, or found creative ways to reduce expenses in your own venture, I’d love to hear from you.)
(This column is written by Jayadev Menon, Business Coach at www.thealternativeboard.in}
