Running a business isn’t cheap. It can feel like you’re bleeding money sometimes, whether that’s paying your staff, buying supplies, or simply paying to keep the lights on. Still, with a few savvy strategies, small business owners can reduce expenses and keep more of their profits.
1. Forget the Phone System
Gone are the days that you need a complicated (not to mention expensive) phone system with extensions for every employee. Today’s technology lets your mobile phone double as your business line.
Whether you simply use your mobile number as your business number or you use a virtual phone system that greets callers with an automated message and lets them select a number to reach the appropriate department, you can still save hundreds each month over what you’d pay with a traditional landline system.
2. Consider Whether an Office is a Necessity
Certainly, some types of businesses need professional space. Retail, for example, or real estate if clients need to come in and meet with the agent. But for other businesses (graphic design, marketing, accounting), office space can be an unnecessary expense.
If a home office makes sense for you, carve out a space for it in your home. You might not have an entire room you can convert to an office, but if you have a nook or even a closet you can transform, it will work fine. You can use the money you save not paying for commercial real estate to reinvest into your business!
3. Buy in Bulk
If you sell products, you can typically save more on a per-unit cost if you order larger quantities. Negotiate with your supplier to reduce what you pay on a larger order. If the supplier isn’t willing to negotiate, shop around for a better price.
A note here: don’t buy more than you know you can sell in a reasonable time. It makes no sense to order 10x the products if you couldn’t sell them within a year. And don’t stretch yourself too thin by ordering more than you can afford to order, given your current cash flow.
4. Carefully Track Your Expenses
If you’re using accounting software (and you should be), you can easily categorize your expenses so that they’re organized. This makes it simple to see at a glance what you’re spending money on.
Carefully assess each expense category and see what you’ve been spending in each over the past year. Is there a category that you could reduce costs in? Maybe you attended several industry trade shows last year that didn’t get new business. Cut back on that spend this year. Or perhaps you invested a sizeable amount in advertising that didn’t bring the ROI you wanted. Put that money toward other revenue-generating categories instead.
5. Track Your Marketing Efforts
Speaking of advertising: the great thing about marketing and advertising these days is how trackable it is. You can place an ad on a social media site and see, within hours, how many people have viewed, clicked, or bought from the ad.
This is valuable in a few ways: you can modify your efforts instantly to see better results. And you can see which marketing channels are leading traffic back to your site and converting to sales. For those that are falling short, you can stop them immediately and focus on more successful channels.
6. Hire Freelancers
If you need help in your small business but can’t justify hiring full-time employees, there are other options. You can hire part-time help or even freelancers that you just pay for a specific project or scope.
Rather than paying someone to sit in the office 40 hours a week (whether or not they’re being productive), you pay just for what you need, whether that’s a new website or help with content marketing. In the long run, it’s a more cost-effective solution.
7. Focus on What You Do Best
It might seem counterintuitive to hire help rather than managing all aspects of running your business on your own, but in the long run, it will save you both time and money.
Let’s say you need a logo and decide to design it yourself (despite the fact that you have no skill or experience in logo design). You spend days struggling to design a professional looking logo. That’s the time you aren’t applying toward running your business. And if the end result isn’t polished and appealing, you’ve wasted that time on a logo that will turn people off.
A better solution is to hire a professional for the job. Even though it’s a financial outlay, you now have freed yourself up to focus on what you’re good at in your business. And the investment in a professional logo will pay for itself when it attracts new clientele to your business.
8. Look for Free or Affordable Software
Just like there’s an app for everything these days, there’s also business software for every aspect of running your business. Some charge and some do not. Some are geared toward larger businesses (with larger budgets), while others are more reasonable for the small business budget.
Most business software offers a free trial, so test it out for a few weeks to see if it makes you more productive in your business. If so, it’s well worth the minimal expense to implement it into your business workflow.
9. Barter with Another Business
Another way to cut business expenses is to exchange services with another business that offers something you need. Let’s say you are an accountant and you need a new website but can’t afford one. You could offer accounting services to a web designer in exchange for that site design.
Just make sure the value of services you offer in exchange is equal to what you would pay for that product. For something like a website, there is a finite cost to it; match up an accounting package to offer in exchange, like setting up accounting software, training the business owner on how to use it, and reviewing his accounts for tax season.
10. Save Unnecessary Costs for Later
Sure, you’d love to install a fancy espresso machine in the breakroom for your staff…but is that really an expense you can justify right now? Just because things are tight financially right now doesn’t mean they will be in the future. Set aside these expenses until the business is booming and you can afford them. Use them as incentives to help your business thrive!
Cutting business expenses doesn’t mean you have to fire staff or work out of a box. Shaving off an expense here and there can add up over time and help you get on your feet as you grow your small business.