Over 50% of businesses cease operations due to lack of financial funding or profits, according to a report by the Global Entrepreneurship Monitor in 2015/2016.
When business owners plot ways to grow profits, they usually focus their energy on how to get more customers to increase sales, rather than how to cut costs.
Think you’ve already tightened the belt? Think again. For sure, you can find one or two frivolous expenses to cut.
Here are 10 cost cutting measures that’ll help you bring down your business expenses.
Manage Cash Flow
Managing your cash flow ensures that you receive more money than you spend. If you’re just getting started, steer clear of long-term financial expenses by leasing supplies and equipment rather than buying when possible.
Hold on to your money as long as possible by paying your bills when they are due. Once you’ve developed a solid relationship with suppliers, you can request for extended terms to improve the state of your cash flow.
Avoid Unnecessary Expenses
Don’t waste cash buying things your business doesn’t actually need. A nice leather chair can look beautiful in the office but hardly improves your bottom line.
Before buying anything, ask yourself what value that item can add to your business. But if your office really needs a new chair, you can find a good and inexpensive one on eBay or at your nearest second hand furniture store.
This should be a pretty straightforward strategy on how to cut expenses, but it might surprise you to find that not many companies consider this as a way to reduce expenses.
Going paperless could help reduce the amount of cash you’re spending on shipping, paper, and printer ink.
To help you reduce these expenses, consider sending faxes and emails instead of letters whenever possible.
This not only can help declutter everyone’s life but it is also more sustainable. The efforts to cut your carbon footprint may even impress those who do business with you.
Reorganize Your Office Space
A huge office space may be an unnecessary expense, especially when you’re just getting started. There are three ways in which you can dramatically bring down your capital expenditures:
Join somebody else’s space: Try and find spaces whose tenants are tied to long leases. You’re likely to find an inexpensive space if they’ve got extra space.
Share space: You can consider sharing an office with another small business that’s in search of office space. This can especially be beneficial if your small businesses complement one another.
For instance, a trucking company could get discounts from a fuel company like Quarles. Be sure to check out Quarles Delivered Fuels for more information.
Go virtual: If your business works in a style that doesn’t require one-on-one contact, you might save a ton of money by having your staff work from home.
Cost Cutting With Freelancers
As your business expands, it becomes harder to handle increasing tasks. You’ll need more hands, but you might not quite be ready to hire new employees. For short-term tasks that need specialized skills, consider using freelancers.
Freelancers fill gaps in your staff when you’re not ready to hire long-term employees. Unlike your employees, freelancers only get paid for what they work on. And you don’t have to worry about handling payroll taxes or finding consistent jobs for them.
Find Ways to Advertise Your Business for Free
If you’re spending money on advertising without capitalizing on free advertising tools, you might be making a big mistake.
There are several strategies you can capitalize on right away to help grow your audience. First and probably the easiest is social media. Don’t just use the normal social media accounts though.
You can promote popular posts at a low price so they become automatic ads. You can also try Instagram for Business, where you can check the insights on every post, covering everything from how many impressions were made to your peak activity hours.
Negotiate Reduced Prices With Suppliers
You shouldn’t simply be haggling for better deals with credit card firms; you should also talk to your suppliers to get lower prices.
Most suppliers are open to negotiating prices, and of course, they’d rather do so instead of losing a regular customer.
As leverage, you can find a supplier with lower prices and then ask your current supplier to beat or match the offer. If they won’t, it could be time to make a change.
Cut Business IT Costs
Switching to cloud computing can help your business access a variety of up-to-date software without needing to buy it. Also consider ditching expensive email servers and data storage.
Web-based software is not difficult to install or maintain, so you don’t have to pay for IT support as well. Shop around to find the most affordable cloud service subscription.
Buy Refurbished Equipment and Furniture
You can reduce capital expenditure by purchasing used office equipment and furniture that’s often as useful as the new version but offered at a lower price.
Based on what your business does, your second hand purchases might include:
- Storage equipment like bins and liquid vats
- Glassware and cutlery
- Office technology, like printers and copiers
- Personal technology, like refurbished laptops, tablets, and smartphones
- Packaging and assembly equipment
- Vehicles, such as company cars and delivery vans
And since you’re the one to operate and maintain the equipment and furniture, you should ensure that they’re well looked after and provide real value.
Limit Business Travel
Don’t take long-haul flights to meet with only one person. Arrange a number of meetings with both current and prospective clients to rationalize the cost.
Try video conferencing in place of a one-on-one meeting. On crucial business trips, save by booking rail travel in advance or booking hotel rooms at the last minute.
Make Cost Reduction a Priority
Small business owners must rein in their expenses or serious problems could occur. A business needs cash reserves to cushion it from the inevitable ups and downs of the market.
Want to learn more about cost cutting in your business? Well, check out these tips to help keep your business running smoothly.