These simple cost-cutting strategies don't require much time or effort.
Reducing your expenses does not take much time or require much effort. Here are several simple ways to make your small business more financially flexible.
1. Make more environmentally friendly decisions.
Going green is a great way to reduce costs, and it's helpful for the environment. Consider making these small changes to your office:
- Switch halogen or regular lights to LEDs. LED bulbs reduce your consumption of electricity and give off better lighting. Where possible, use motion sensor lights to reduce your use of electricity.
- At first glance, it may not seem like you spend a lot of money on paper, but if you have stationery, the costs of it, along with ink, toner, etc., can add up to be a lot. Ask employees to use email whenever possible. Some people still believe that documents, such as contracts, need to be printed, signed and exchanged. However, most contracts can be digitally signed and shared via email, which can reduce your long-term paper and printing costs.
- Shutting down computers at the end of the day will save on your electrical bill. Ask employees to shut their computers down and to use a timer or standby mode on their computers.
2. Be flexible in hiring employees.
With changes in technology and in the workforce, hiring independent freelancers brings many benefits to small businesses. This can help you in several ways:
- You can adjust your staff up or down as needed depending on your business's current workload. Further, you can quickly outsource and find the specific skills you need without hiring a long-term, full-time employee.
- You can provide flexible working conditions that help you locate the talent you need and that also accommodates the freelancer's schedule. This flexibility can help you retain these experts for a long time.
- Because you don't have to provide office space and resources for in-office workers, you can reduce the office space you need and the office equipment you use.
In a volatile economic environment, the use of freelance and temporary employees can be a valuable and money-saving advantage, as SMBs can rely on skilled temporary staff to quickly complete tasks without excessive financial commitment in the long term.
3. Automate your operation.
Technology allows us to save money and manage our businesses in smart ways that were not possible five years ago. There are online payments, open-source software, applications and many other ways you can reduce project costs using technology.
Payroll software, for example, can perform all the functions of a payroll administrator. Payroll software helps you calculate staff salaries, pay employees in a number of ways, and ensure that your business complies with all federal and state tax regulations.
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In the era of Google Voice Assistant, Alexa, Siri and Cortana, it is possible to use these aids to your benefit. For example, long documents can now be dictated using voice commands.
4. Using a common working environment.
Rent is often one of the biggest overhead expenses for small and midsize businesses. You can eliminate this cost by moving to a shared work environment like WeWork, Work.Life or The Office Group.
Alternatively, companies can collaborate with each other to rent out office space that accommodates multiple businesses under one roof, which, in turn, makes rent more affordable for everyone.
5. Compare prices and quality before you buy.
You can cut your monthly expenses by shopping online stores and comparing the prices and quality of items before buying. Price comparison sites can help you reduce costs.
Don't forget to search out better prices from suppliers. An email request sent to a few competing companies can save a lot of money. Even if you want to stay with your current provider, getting a better offer from a competitor can result in a renegotiated price from your existing vendor.
6. Review company benefits.
Benefits are one of the major incentives for employees and employee satisfaction. They are also a major source of overhead for small businesses. By reviewing and shopping benefits, it is possible to lower costs without changing the quality of the benefits for employees.
One of the easiest ways to improve benefit spending is to provide a flat contribution instead of a contribution. This means you pay the same regardless of what medical plan an employee chooses.
7. Consider used vs. new equipment.
While you may pay less for a used piece of equipment, that doesn't mean that used equipment is always more cost-effective. Reviewing expected lifespans, warranty coverage and maintenance costs can help you compare new versus used for all of your major equipment purchases to make a wise decision.
8. Pay invoices early.
Many vendors offer discounts for early payments. It's a simple strategy that helps them secure a more reliable revenue stream, and it can help you lower the cost of operations.
This is especially effective for purchases that are not the same every month (or week or otherwise). Supply invoices tend to fluctuate, and many suppliers will relish the early payment.
9. Investigate outsourcing.
Outsourcing can be a fickle opportunity for any small business. In some cases, it may save money; in other instances, it's better to retain the employee(s).
Common departments whose functions are outsourced include IT, legal, accounting, marketing and HR. While this isn't everything that can be outsourced, when you do your homework, you will find opportunities to save money.
10. Pay your loan installments on time.
Last, the amount of money you save by making timely payments on outstanding loans should not be overlooked. Set up an automatic deduction from your bank account, whether it's weekly, semimonthly or monthly. By making regular payments, or even getting ahead on your payments, you'll save thousands of dollars in interest while also increasing your credit score.