The survival of a small business can be uncertain even in the best of times. Margins are often thin, and you’re constantly working to maintain the finances. The uncertainty is even greater if you are a newer small business. Only about half of all new small businesses survive the first five years.
While generating more revenue would be a great way to secure the finances of your business, it isn’t something you can just turn on like a switch. For most small businesses, the more attainable path to improving financial security is to cut costs.
While you might think you are already running a lean operation, there is a good chance there are ways you could save money. This post will cover a few ways small businesses can cut costs.
Develop a Plan
There is no way to be efficient with your spending if you don’t have a plan. Outline your financial goals and develop a plan for reaching them. Along with that, you need awareness of your general finances. With better awareness, you can see which goals are attainable and make realistic plans for achieving them. That means you need to track all your income and expenses. When you see where your money is going, it can be easier to identify waste.
Lose the Office
Office rent can be one of the biggest expenses for a small business. If you can cut that expense without affecting operations, you could save a considerable amount of money. One option could be to create a home office. You could also have employees telecommute. If you still need something like a traditional office, you could also consider options like co-working or shared office space. These options provide the resources of an office without having to pay as much.
Reevaluate Your Suppliers
So many small businesses find suppliers and vendors and then just stick with them for years without thinking about it. While your current suppliers might seem good, there is a chance you could save money by shopping around. Look for alternatives that offer better pricing. You could also consider switching to bulk buying for some of your needs. Small businesses can also attempt to negotiate new prices with existing vendors. They might be willing to give you a break if they think you’ll switch to one of their competitors.
Cut Marketing Costs
Marketing can be a significant expense for a small business. However, you can’t stop marketing altogether. You probably need it to generate new leads and attract more customers. That means you need to find ways to cut marketing costs. One option could be to deploy more digital marketing tactics. Options like search engine market, email marketing, and social media offer good reach while costing less.
Switch to Free Tools
How many software tools do you use at your business? How much are you paying in subscription fees to use these tools? Individual software systems might not cost that much, but the price can add up when you look at them all. For example, you might need to hire a tax professional, but you could probably use free bookkeeping software. You can also find free tools to use for invoicing, managing your workflows, inventory tracking, and more.
Buy Used Equipment
Equipment can be another significant expense for some businesses. However, there is a good chance your business needs certain types of equipment to function. One way to save money is to buy used equipment. As long as it is in good shape, the used equipment will be significantly cheaper than buying new pieces. This is especially true for businesses that use vehicles. Instead of buying new cars or trucks, buy used ones after performing a thorough inspection.
Staffing can be another significant cost for small businesses. However, there is probably only so much you can do to cut employee costs. Your business has work it needs done. As long as the work doesn’t require a person to be there with you, you could consider outsourcing with online contractors. For example, hiring a virtual assistant to handle administrative tasks could be a way to cut the cost of having a secretary. You can also outsource tasks like web development, marketing, tax preparation, and more.
Switch to Paperless
Paper and associated supplies can also be a significant expense. If you switch to digital documents, you can save money on things like paper, ink, and storage. Sending customers paper invoices can also be an unnecessary expense. You could save money on paper and postage by offering digital invoicing. If you have employees, you should also try to get them to switch to direct deposit instead of paper checks. You might not be able to get rid of paper entirely, but you could cut its use down significantly.
These are just a few tips to help small businesses save money. However, there is probably more you can do. Look closely at every area where your company spends money or uses resources. Even minor savings can make a big difference for a small business.