Running your own small business can be an expensive process. You have your employees to pay, you have to buy your supplies and space, and you must decide how to promote your business. Though these may seem simple individually, costs add up quickly.
When it comes to reducing expenses and saving money, you have more options than you might think. By reading this blog, hopefully we can help you get some ideas on how to cut down on costs and make a plan moving forward. Even the smallest of changes can have a big impact!
- You should have a plan when deciding to reduce expenses. Ask yourself how much time you have, whether you’re planning short or long term, and which expenses are essential.
- There are different ways to reduce expenses in each area of your business. Be aware of what systems and equipment you’re using, in both the physical and digital space.
- Take care of your human capital. A happy worker is usually more productive.
- Make sure you plan your finances, and you keep an eye on your cash flow throughout the periods.
Making a Plan: Questions to Ask Yourself
1. How much time do I have?
Take a look at your bank balance and see how long your business can run based on its income and expenses at its current rate. Compare with previous years, and check to see if you have any big events coming up that you should take into account, like the annual party expenses or holiday season profits.
2. Am I aiming to reduce expenses short-term or long-term?
After seeing your bank balance and determining it’s in reasonably good health, maybe you only need to reduce expenses temporarily. On the other hand, maybe you’ve seen that your costs have always been high, and you want to work on building a safety buffer, so you could decide to make long-term cuts.
3. What expenses do I absolutely need?
Find out what costs your business cannot work without. For example, the Netflix subscription for the office is probably not essential, but you do need an internet connection for the business.
Of course, there can be decisions to make on what is “essential.” It could be an investment to keep something that just makes life easier.
20 Ideas to Help Your Small Business Reduce Expenses
With the above questions in mind, here are some ideas on how your small business can reduce expenses.
1. Consider all options: Before settling for one insurance carrier, it’s worth doing price comparisons with various companies to look for the best deal.
2. Reduce energy use: Try to remember to turn off lights when you leave the room. Turn off your computers at the end of the day. Remember to turn your heating off when you’re not there.
3. Go paperless: You can lower storage costs, printing costs, and improve efficiency by going paperless. You can also save on time, as scanned documents can be made faster and take less effort to share.
4. Have a flexible work location: Renting office space is extremely costly. If your business can be remote, you might want to consider an online space.
5. Use space wisely: When you do have a work space, make smart use of the space available. You should prioritize multifunctional work spaces.
6. Purchase second hand equipment: Though you might want all-new equipment, there’s nothing wrong with buying second-hand items. People sell perfectly good wares online, or you could go to local second-hand stores.
7. Manage subscriptions: Make sure you’re only paying for what you use. Check to see what you’re paying for. If you’re paying for something you no longer use, cancel your subscription.
8. Use an open-source system: An open-source system, instead of a closed-source system, means that the source code is publicly available. You can read the code and change it if you want to. Usually open-source systems are free, but more features and technical support can cost extra. Of course, open-source and closed-source systems both have their pros and cons. You should consider both options.
9. Utilize social media: Social media is free and helps with your growing business’s online presence. It’s also easy to test and work out different strategies and content as you go.
10. Encourage talk: Talk about your business and encourage others to talk too! Word of mouth marketing is still in style. People are more likely to listen and then act on recommendations of someone they know and trust.
11. Hire contractors/freelancers – To start, you can hire freelancers instead of full-time employees for certain tasks as needed.
12. Hire talent over experience: Though you may need to invest more time in training, those fresh out of school often bring creativity and new ideas to businesses at a lower cost than those who come from experience.
13. Encourage time management best practices: Time is money. Everyone works differently, and you have to find when you’re most productive. Some people work best with variety; some people work best with music. You can encourage your employees to do what works best for them.
14. Consider rewards/perks: There are ways to offer rewards that aren’t annual bonuses but also keep your workers happy. For example, you could offer performance-based bonuses.
15. Compressed hours: You could offer compressed hours as an option for those who would want it. Perhaps some employees want more time at home or at a second job, and compressed hours are something they would be interested in having.
16. Collaborate: You could work with other like-minded local businesses to buy supplies and equipment, services, space, or advertising. It also is good to get to know others around you.
17. Plan your finances: Plan your finances, like creating an expense budget and drawing a sales forecast. This will help you make more informed decisions.
18. Consolidate loans: Remember that debt should be kept to a minimum. Look at ways to consolidate loans and reduce interest.
19. Pay taxes: Carefully consider your tax bill and see if you have any tax deductions. Consider hiring someone to help you with your taxes, or if you can’t afford an accountant, consider trying an accounting tool.
20. Pay on time or early: Communicate with your vendors and see if they offer discounts to clients if you pay early or do bundles. Keeping on top of your cash flows can help mitigate risk against any late fee penalties.
You can do it!
Cost-cutting can be tough. However, if you go about it little by little, your small business’s costs can steadily decrease. Assess the situation, and remember to take it one step at a time.