For many small businesses the focus is on growing sales, but when a business is growing, it’s possible for expenses to grow too quickly and get out of hand.
When this happens, it can lead to cash flow problems and even threaten the existence of a business.
Here are some simple ways to help you cut back on expenses and improve your cash flow.
Use technology to cut small business costs
From accounting software to attending skype meetings, technology provides ways to cut small business costs. For example, instead of connecting and using a landline, a virtual phone number will enable you to communicate with clients and prospects while maintaining a professional image. A virtual phone number is simply a 1300, 1800 or local number that you can forward to any other phone number.
Studies have shown that advertising a mobile number can damage the credibility of a business. A virtual phone number is one way to use technology to cut your costs.
Teleconference services are another way to cut small business costs. For example, instead of spending a lot of time and money attending meetings in person, you can achieve your meeting goals through teleconferencing services such as Skype or Zoom.
Sometimes you will want to meet in person with clients and partners to establish a connection in the beginning, but teleconferencing is a way to cut the costs of future meetings.
Start marketing online to cut small business costs
Online marketing can be an effective way to cut your small business costs. For example, creating a blog on your website and sending online email marketing campaigns can be a very cost-effective way to market to your clients and prospects. You can create short blog posts highlighting your products and showing your expertise in your field. Once you have several blog posts ready, you can email them out in the form of a newsletter.
To pursue this form of online marketing, you will need to capture the email addresses of your customers and prospects. For your customers, it can be as simple as asking for email addresses when you interact with them. For potential customers, you can have an opt-in form on your website with an incentive for them to provide their details. This could be a free resource or another incentive to provide their name and email address.
Social media can also be a cost-effective form of marketing that can help you cut small business costs. If you don’t want to spend money, get involved with groups that have members who could potentially need your products or services. Instead of taking a hard sell approach, position yourself as a trusted expert by offering advice and tips relevant to your industry. If you choose to pay for advertising on social media platforms, you can target your campaigns to clearly defined demographic groups.
Using pay-per-click (CPC) advertising, you only pay when people click your ads in the search results. The cost per click will depend on the how many other companies in your industry are using this form of advertising. One of the big benefits of CPC is that it’s easy to set up and you can quickly see results when people click your ads.
Reduce paper, printing and postage costs
Although a completely paperless office doesn’t seem practical, there are many ways to cut your paper, ink and mailing costs. You can start by transitioning most of your communication to digital formats. If you are still sending out hard copy invoices, switching to email invoices will save you time and money. If you are still filling up filing cabinets with paperwork, consider saving electronic versions to your computer instead.
Cut the cost of your premises
Do you need to pay a large amount of rent for your business location? Some businesses need expensive office space or a prestigious retail location, but does yours? If you are in a service business, you might be able to work from home or a co-working space. If you have an online retail business, you don’t need the most expensive warehouse space but something that enables you to get the job done.
Negotiate with suppliers
Consider the things you buy regularly and see if you can negotiate a better deal. See if you can buy in bulk for a lower rate and get a discount for paying invoices early. If you don’t have the cash available for larger stock orders, it can sometimes pay off to look into inventory finance options, so that you can get the best rates on a bulk order, without putting too much of a dent in your cash flow. Ask us how!
You can also look at bundling products like insurance. For example, if you have home and contents insurance, QPF Insurance Brokers can check if there’s a better deal in the marketplace, or assist you to see if the company can provide a discount if you agree to take business insurance from the same company.
Create a budget that you adhere to
It can be tempting to increase your expenses as your business grows. By giving you a clear picture of what’s coming in and what’s going out, a budget will serve as a roadmap that will keep you on track and help you make better decisions when it comes to spending.
Consider refurbished furniture and equipment
Office furniture and equipment can be a large expense for a small business. If you don’t need new furniture and equipment, consider getting used versions that are in a good condition. If you shop around, you could gain substantial savings by using refurbished office furniture as well as machinery and equipment.
Cut utility costs
Are you heating and cooling large spaces that aren’t in use? Are computers on all night while not in use? You can take simple steps to decrease your utility bill. Using smart or programmable thermostats (yes we can assist you with finance for these) will help you to reduce your heating and cooling costs. You can turn off lights when offices are not in use and instruct cleaning crews to turn off the lights after cleaning at night. Also, ask staff to turn off their computers before they leave in the evening to decrease electricity costs.
Use freelancers for non-core activities
If you have non-core work that fluctuates over time, you can cut costs by using freelancers and contract workers. If you have occasional work that doesn’t require full-time staff, hire freelancers to get it done. It also makes it possible to avoid additional expenses associated with employees, such as leave and other benefits.
Before money existed, barter was the way to exchange good and services. In modern times, it can be a great way to cut your expenses and save cash. You can find barter exchanges online where you can search for goods and services available on barter and reduce your cash expenses.
So there you have it, 10 simple ways to cut small business costs. Now go ahead and implement what you can!