Reducing expenses for your small business doesn’t mean slashing costs across the board. In fact, there are a few areas that should never be cut, including insurance, employee training and workplace safety measures. Instead, you must be able to locate areas where you can reduce expenses without obstructing profitability or efficiency.
Instead of thinking in terms of cutting expenses, consider how to make your dollar go a bit further. Identify inefficiencies, and consider ways to keep expenses under control. Reducing expenses doesn’t need to be a painful process, but it will require a bit of creativity on your part.
There are many ways to reduce costs as a small business owner, but here are our 10 favorites:
- Step up employee training and resources. Many small businesses are so focused on reducing expenses that they don’t stop to consider that spending more money upfront can mean saving money down the road. Once you consider that better trained employees equate to fewer errors, better efficiency and productivity, and a more engaged staff, it will soon become clear that training refreshers in certain key areas may need to be moved up on your small business’ to-do list.
- Become an office supply discount hound. Simply doing your homework, shopping smart, and negotiating better prices on office supplies, such as printer ink and paper, can save you a small fortune each month. Consider purchasing your office supplies from the same source – particularly one that offers a loyalty program – and instead of placing several orders each month for office supplies, buy in bulk and watch your spending spiral downward.
- Rent/lease office equipment instead of purchasing it. Leasing pricey office equipment accomplishes a number of things, including freeing up cash flow and eliminating a large, initial expenditure. Most office equipment suppliers have favorable leasing terms, including flexible payments, guaranteed maintenance and the ability to upgrade equipment.
- Consider the many perks of co-marketing. Cutting out your business’ marketing and advertising efforts is counterproductive, to say the least, but these activities may be a large expense for a small business trying to make it. It comes as no surprise, then, that many small businesses turn to collaborative marketing: the act of sharing advertising and marketing, or marketing each other’s products or services. Successful business relationships can turn into successful business ventures where both businesses succeed.
- Turn to outsourcing. Outsourcing should always be a consideration for small businesses, as it provides an ideal opportunity to reduce payroll costs. Bookkeeping, accounting and payroll are all areas that require the expertise of seasoned professionals, yet hiring a bookkeeper or accountant may severely cut into your payroll budget. Outsourcing these services may allow you to control costs and pay for only the services you need when you need it.
- Go green in the office. Encourage your employees to be sensitive when it comes to energy usage. Shut all equipment and computers down upon leaving, encourage employees to go paperless when possible, and swap out all of the lighting in the office with energy-efficient LED bulbs. It seems that going green can actually refer to both environmental responsibility, and cash savings.
- Turn to interns. There’s no better way to control staffing costs than with interns. An intern opportunity is a win-win situation, as you can provide valuable on-the-job training for students from a local college, university or trade school, while at the same time cutting your payroll expenses each month.
- Take advantage of invoice discounts. A great way to instantly cut the cost of invoices is to pay them early. Ask your suppliers if they offer discounts for paying invoices before their due date.
- Reduce your inventory levels. Consider turning to inventory management software to reduce your inventory levels and free up additional cash flow. Remember: An idle inventory is a drain on your working capital that you can better use elsewhere.
- Turn to social media for effective marketing and advertising. Today’s small businesses can’t underestimate the power of social media. Facebook, Twitter and blogs are a fantastic and effective way to market your small business, and they are considerably less expensive than most forms of traditional advertising and marketing.
About the Author: Kyle Martz is a freelance writer and graduate from Purdue University where he majored in Accounting. He often writes about accounting education and career requirements at AccountingEdu.org including various publications on the subject of small business.