Most small businesses run on tight margins. It can make business owners feel like they are always just getting by. Tight margins can also be a significant problem if an unexpected expense comes up. You might not have the cash on hand to handle it, or it might be difficult to get a loan.
The ideal solution for most businesses would be to grow sales and make more money. However, that isn’t always possible. It’s also usually something that takes time to achieve. That’s why cost-cutting is generally a better way to give your business financial breathing room.
But how can you save money at your small business? You might be surprised. This post will explore a few strategies for cutting costs at small businesses.
Review Current Expenses for Waste
Saving money should start with a review of your current expenses. Open the books to see where every penny is going. Using accounting or bookkeeping software can help with expense tracking. Beyond looking at past expenses, you might also want to track expenses as you go. You could use various apps to track daily spending. It can help you get a picture of even the smallest of costs. Once you’ve reviewed your business expenses, you might identify several ways the company is not being efficient with its funds.
Evaluate Your Office Space
When was the last time you thought about your needs for office space? For many businesses, the owner hasn’t thought about it since they moved into their current space. Consider how your needs have changed and if you still need all the space you have. Maybe you could downsize to a smaller office. You might also be able to negotiate a better lease if your landlord thinks you might leave.
Small businesses also have many alternative options to traditional office space. A co-working space could work if your business is just you or a few people. Some office buildings also offer shorter lease terms. You can now find office space for rent on a monthly, weekly, or even daily basis. That way, you’re only paying for the time you need in the office.
Outsource to Online Contractors
Small businesses can benefit from outsourcing many of their non-core functions to online contractors. For example, you could have a virtual assistant handle much of your administrative work at a lower cost. You could also hire people online for things like managing your website, marketing, and accounting. It can save money since you won’t have to pay all the additional costs that come with having full or part-time employees. Outsourcing might also help you reduce your need for office space. You just need to learn about which platforms to use and how to vet online contractors.
Assess Marketing Efforts
Many small businesses put the marketing budget on the chopping block when they need to save money. While marketing might not be a core function, blindly cutting the budget is probably a bad idea. Your business relies on marketing to attract new customers and to keep its existing customers coming back. Instead of simply taking a knife to the marketing budget, spend a little time evaluating your efforts.
Look at the different ways you promote your business. Evaluate the amount you’re spending and see the return different efforts provide. If you’re using traditional marketing tactics, you might also want to consider focusing more effort online. Email marketing offers an impressive return per dollar spent. You also have options like search engine marketing and social media.
Buy Used Equipment
Equipment and tools can be some of the biggest expenses for small businesses. However, many businesses can’t function or compete if they don’t have the right equipment. Most of us want new equipment, but some pieces might be too expensive. That’s why you should consider used equipment for pieces that come with a particularly high price tag. As long as the equipment is functionally sound, you can save a lot of money while still getting what you need.
Review Software Services and Subscriptions
Modern business software can do a lot to simplify operations. However, it can also be costly. Business owners should take the time to occasionally review all the software services they use and the subscription costs. You might find that there are many you don’t need or that you could save money on.
Start by reviewing every service and considering whether you still use them. If it is something you signed up for a long time ago and forgot about, cancel your subscription. After that, review the remaining services and consider whether you could use a free version. You can find free business software for a wide range of purposes. It can cover everything from accounting and payroll to project management and analytics.
Go Digital
Another way to save money is to switch from paper documents to digital. It can save on storage space and printing costs. Beyond using it for internal documents, you should also encourage customers or clients to accept digital invoices instead of paper. That can save on mailing costs as well. Additionally, digital files can be easier to manage and access. That can save time for employees and make your business more efficient.
The final tip for cutting costs at your business is to make it a consistent part of what you do. Regularly review expenses for waste or savings opportunities. Make cost-cutting and efficiency part of the culture.
