As a small business owner, one of the more difficult aspects of growing a business is reigning in spending. The more business you bring in, the more resources you need to satisfy your clients and customers.
That being said, spending shouldn’t scale proportionally with growth. It should actually be quite the opposite.
If you want to increase profits, you must learn how to grow revenues while keeping expenses low. In this article, we'll focus on just how to do that.
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America’s Spending Problem
In case you haven’t noticed, America has a spending problem. Just check out this mesmerizing ticker to get an idea of how much we enjoy spending the money we make.
When you compare the average American’s daily spending and consumption habits against other countries across the globe, it becomes apparent that we are serious outliers.
The amount we spend as a country is absolutely staggering. The problem with our personal spending habits is that they often spill over into other areas of our lives.
As a business owner, it’s challenging to be a loose spender at home and a strict budgeter at the office. If you aren’t careful, you’ll create an unhealthy crossover between the two.
Why is this relevant? Well, consider that as average household income increases, so do the average expenditures.
In other words, Americans aren’t conditioned to understand the importance of saving. When we make more money, we assume that we should also be spending more money.
In business, this same approach is toxic. If you assume that your expenses must scale proportionally to your revenues, you’re going to end up unprofitable or out of business in a matter of months.
Successful and thriving businesses are built when companies are able to slash expenses while increasing revenues. While the concept may seem obvious, it’s amazing to watch companies disregard this idea as they experience significant growth for the first time.
Sometimes this is because the executive leadership is oblivious, while other times it’s the direct result of a lack of understanding. Specifically, many businesses don’t understand where they can cut costs without compromising growth.
6 Tips for Curbing Spending Immediately
In order to help you do just this, let’s take a look at some practical tips that will allow you to curb spending quickly and efficiently, without negatively impacting your growing revenues.
1. Hire Interns
Internships are mutually beneficial for both the intern and the company. Despite this, most businesses never consider hiring interns.
While there are certainly situations in which interns aren’t right for an organization, the reality is that establishing internships is extremely profitable on many fronts.
First off, interns command much less salary than full-time employees. The reason is that they are normally paid at an hourly rate, typically less than $15 per hour.
When you compare this rate to the $40,000-plus it may take to hire a full-time employee, you can see just how much savings are in store.
Secondly, a well-oiled internship program actually reduces your recruiting costs. The reason is that a positive intern experience often encourages that individual to apply for a full-time position down the road.
In other words, you’re establishing a recruiting funnel that brings applicants to you with little to no effort.
2. Be a Strategic Shopper
When it comes to buying office supplies and equipment, many businesses don’t have a strategy or plan.
They simply head to the store, throw a bunch of items in the cart, and use the business credit card. If this sounds familiar, you’re definitely overspending.
Shopping for business supplies and equipment needs to be a strategic endeavor. Whether you’re purchasing an expensive computer or ink cartridges for the printers, you have to think about every dollar you spend. Some tips include:
- For better prices on items that you run through quickly, purchase in bulk.
- Always comparison shop before heading to the store. Most office supply stores will match another store’s low prices.
- Always make a list before going to the store.
- Sign up for rewards programs and business accounts with companies you purchase from regularly.
- Keep a budget to track all expenses. This will prevent you from purchasing items you don’t need.
- While these may seem like small and insignificant expenses, every dollar counts. Saving just a few hundred dollars per week on expenses can leave you with a $50,000 surplus at the end of the year.
3. Find Sponsors for Events
Events are very important for businesses. Whether it’s a gala, seminar, or simple meet and greet, events enhance visibility and provide excellent opportunities for networking.
The downside, though, is that events aren’t cheap. You have to account for marketing, advertising, food, speaking fees, setup, materials, etc.
The good news is that you don’t have to spend all of your own money on events. By working with local businesses in your network, you can find sponsors willing to carry at least part of the expenses in return for advertising.
This is generally a very good tradeoff and can help you grow your brand without cutting into your budget.
4. Cut Back on Business Travel
As you know, business travel is anything but cheap. Sending two of your employees to an out-of-state meeting for one night can cost you a few thousand dollars by the time you add up airfare, hotel accommodations, food, and lost production.
And while there are times when it’s necessary to travel, the fact is that most of today’s communication can happen remotely.
Thanks to incredibly robust software solutions, cloud services, video technology, and other advanced products, remote meetings are almost as good as face-to-face meetings. Definitely something to think about.
5. Bundle Services Together
How many different vendors do you purchase products and services from? Not only is it confusing to work with dozens of different providers, but it’s also more costly.
Consider dwindling your list down by bundling services together. For example, phone service, cable, and internet can generally be bundled together.
Web design, content writing, and digital marketing can as well. Look out for overlaps between these services and you’ll be surprised to learn that many vendors will offer you deals.
6. Know When to Outsource
While there’s something to be said for keeping things in-house, there comes a time when outsourcing is much more cost-effective.
If something isn’t a critical component of your business, then you should at least consider the possibility of outsourcing.
This isn’t to say you should outsource every small task, but you’ll be surprised to find that it’s often cheaper and more efficient to let your employees focus on other things.
Some of the top tasks to think about outsourcing include digital marketing, content writing, public relations, web design, and accounting.
These are all things that can be done by someone else without compromising quality or integrity.
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Reel in Spending
The moral of the story is that you need to find ways to reel in spending. Just because your business is growing, doesn’t mean your budget has to scale proportionally.
There are ways to slash expenses as revenues increase. This is how businesses grow profits and build strong foundations for future success. While these are just a handful of tips, they should get your creative wheels turning.
Use them as launching points and gather your employees to discuss the various ways your company can save money in the coming months.
It’ll be one of the most important discussions you have all year.