You may be researching methods to cut business costs for your small business. Maybe your business isn’t getting the sales you projected or maybe the customer needs are changing. Whatever your reasons, cutting business costs will help solve many issues. Think about ways to reduce your startup costs and expenses. What have you done or what do you need to do to make your small business a success?
Here are some top methods for you to cut business costs:
1. Consider Your Office Space
Consider the overhead costs and think about your location. Do you need an office? Could you move your small business to your home or could you do a shared space office with other small businesses? This may be an option if you have employees who would only come in and out for meetings. What is a shared space? You along with other businesses share office space, meeting rooms, and break rooms. You can pay more to have a guaranteed office or pay less to just have a desk in an open space. Either way, there are benefits such as meeting other business owners and striking up conversations to develop your business further. Maybe those other startups can offer you the services you need and vice versa.
Does everyone need to work in an office? Could you think about offering work-at-home options? This could cut down on your overhead expenses while offering a benefit to your employees.
2. Reduce Your Office Supplies
Another way to reduce overhead is by reducing your office supplies. By keeping an office supply budget, you can limit how many pens, paper, toner, and other office supplies you may be over purchasing. If you have five employees who can buy whatever they want and expense it, then you may have a problem. By creating a budget and designating one person you trust, you should be able to cut your office supply expenses.
3. Review Your Inventory
If you are selling goods, you should ensure you don’t have too much inventory. You don’t want to run out of stock, but you don’t want overflow either. Monitor and keep count of your inventory. For example, some items may not sale as well or they may sell better during certain seasons. When you have adequate inventory controls in place, you will have a better handle of your high and low selling items.
4. Think about Your Marketing
What are you doing to get customers? Are you spending too much on marketing that doesn’t work? Be creative and research best practices. Craft messages which resonate with people. Get rid of marketing plans which don’t work well or are archaic. For example, are you paying for a phone book ad that no one sees?
5. Use Low Cost or Cheaper Technology
There are many low cost or free options for your business to use. Research and try some of them to find out what works best for your small business. If you are paying too much for some technology that you could get cheaper, consider an alternative route. Maybe you worked for a large company that had great software you used. For a small business, you probably don’t need that advanced software. Find software that is great for a small business.
For example, what are you using as a time clock system? An app like ezClocker can help you keep track of your time for each job. It is simple, easy to use, and affordable. There is even a 30-day trial. Your employees can use their own mobile devices to clock in and out. A GPS timestamp is also recorded so you can verify the location. You will also have the ability to add customers, jobs, and hourly rates so you can determine out how much a job will cost before invoicing your customers. It is a great way to see if you are spending too much time on a job and getting paid what you should.
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Consider technology such as Dropbox as a backup for your documents. Also, what accounting software do you use? QuickBooks is great for small businesses and there is even a mobile app where you can quickly input your purchases.
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6. Review your payment options
How do you collect payments? You can use Square, Venmo, PayPal, and other ways to collect payments so you can ensure you offer safe payment options. People may feel more secure in these options rather than giving you their credit card information. The fees and processing times may be easier and cheaper for you too.
7. Reduce Large or High Equipment Costs
You may be considering purchasing new equipment to be able to offer your customers a new service. For example, if you own a janitorial company, you may want to invest in a buffer so you can get bigger contracts like grocery stores. Consider any major equipment cost and determine if renting is a better option than buying.
8. Offer Low-Cost Benefits to Your Employees
You may be looking at methods to keep your employees. Owning a small business is great for many reasons, but sometimes employees leave because they want benefits.
There are low-cost benefit options such as paid leave, 401k or IRAs, training or tuition reimbursements, flexible spending, employee wellness, and perks such as offering flexible hours that can be low-cost. Develop a benefit budget and brainstorm some different ideas.
You may not be able to offer health or dental insurance until your business grows. However, you should be able to find benefits that are low-cost. Offering these resources will help prevent turnover.
9. Manage Your Cash Flow Issues
Developing cash flow strategies can help you prepare for any decline in your business. Ensure you forecast how much money goes in and out of your business. This guide can help you forecast your expenses and revenue. By forecasting, you can see where you may have underestimated an expense or revenue.
Also, don’t try to cut costs by trying to put everything on sale. It is good to run discounts every once in a while. However, if you cut your business revenue too much, you will find yourself not making a profit. Consider cutting expenses before you cut your revenue.
If you are running into a short-term problem, consider small business loans or research other revenue streams.
Other Ways to Cut Costs
Develop a budget for every major expense. Understand the categories and try to keep on track for those expenses. If you start going over your budget, you may be increasing your revenue in that area. When that happens, you may want to increase your budget in that category.
Also, review other small business productivity tools that may help save time and are low cost. Research and learn from others the best ones for your business.
Consider your staffing needs. Could you outsource work to freelancers or hire interns for a cheaper option? Upwork is a great tool to get freelancers and interns who want valuable experience. You may have to spend time training, but you may also find a future employee as well. Interns can also handle some of the more mundane tasks so your other employees can do more revenue-building tasks.
If you take time to do your budgets, try new programs, and research best practices, you will save money and cut costs. Don’t rush into something because it seems easier. You shouldn’t take shortcuts that may hurt your business in the long run.