Small businessmen are always trying to cut corners in a bid to lessen their expenses and increase profits. And why not? All entrepreneurs, experienced or otherwise, look for ways and means to cut their costs. It makes excellent business sense to be wise and frugal from the start instead of squandering away all that hard earned money without a plan.
There’s no escaping the fact that running a business smoothly will require you to spend. Whether you run a brick-and- mortar outlet, a virtual firm, or a service station, any commercial establishment comes with its own set of expenses.
The good news is that the smart and modern entrepreneur understands this and is willing to spend where required as he knows that he cannot totally eliminate these costs. At the same time, he knows that there are steps he can take to bring them down by making minor changes to his business operations.
We live in times when keeping costs low is one of the biggest priorities for all businesses. Several businesses have managed to do so successfully without hampering their growth rate or efficiency of operations. You, too, can reduce your outlays and rake in the profits. Here are a few tips on doing so.
1. Try Co-opetition
While you’ve heard aplenty about and participated in business competition, you may want to give one of the latest trends in business – called co-opetition – a shot. It involves finding and forming business alliances with other small entrepreneurs in your niche.
The alliance entails collaborating to save money on supplies and other goods. This can work out extremely well as it is mutually beneficial and ensures that not only do you end up saving money, but also provides you with opportunities to network extensively within your industry.
2. Hire Interns
I’m sure every year several interns approach your firm so they can get some hands-on experience of being and learning in a professional setup. It’s time to let them have their wish, while you fulfil yours simultaneously.
Hiring skilled interns can help them acquire the valuable work experience that they desire, plus you, as an employer, can get your work done by them at very low or even no cost.
While this sounds too good to be true, you may have to hire them carefully. Do keep in mind that they will need to be trained in the processes and procedures, systems and software before they can be put on the job. So, do think this step through.
3. Make Your Payments on Time
It’s no secret that late payments attract a penalty, while timely payments do not. Hence, always make your payments in time to avoid unnecessary extra expenditure and save that much.
Additionally, some suppliers offer discounts to buyers who pay their invoices within the first few days of receiving them. Doing so allows you to save more than you normally would, plus it is also a great way to build goodwill and trust with your suppliers.
Do be mindful, however, that in order to make early payments, you need to have enough money with you to pay for orders when they come in.
4. Always Ask for Discounts
Unlike credit card companies, retailers don’t always spell it out for you, but many of them do offer discounts to small business owners upon the purchase of their items. It is your responsibility, however, to ask and negotiate lower prices with your suppliers.
Most suppliers would not hesitate in negotiating as they would rather accept a slightly lower price than lose a regular customer.
Be sharp with this tactic. Do not expect to receive discounts on small, low-priced items like stationery. If you’re buying large office equipment or another high-priced item, on the other hand, you can hope to get a better deal.
5. Invest in Time Management Software
In the business world, time is equated with money. Wasting time is considered as bad as (if not worse than) wasting money as it is a limited and a precious resource. Whiling away time can cut into your sales and eventually hurt your bottom line. You need to manage your time effectively today to ensure that you save money in the long term.
While there are several time management techniques that help you do that, they may not work for everyone. A better alternative to that is investing in time tracking software that helps you track and control not just your own time, but also that of your employees.
Such software enables you to figure out where you’ve been spending an undue amount of time, and which tasks need more of your time and attention and let you reallocate your resources accordingly, thereby increasing business productivity.
6. Go Paperless
Paperless offices are on the rise as they not only allow you to become eco-friendly, but also help you cut down expenditure related to buying paper, printing supplies, and the associated labor costs. Saving files and documents electronically to your computer can save you a ton of money in the long term.
Your electronic data can be saved on free online drives. You can view this data from anywhere any time, and save a hell of a lot of paper and printing costs while doing so.
7. Embrace Energy Efficiency
We all try and save energy at home to bring down electrical costs, so why not extend that logic to office? There are several ways of reducing your electricity bills, with the most effective ones being using energy-efficient lightings and appliances, particularly those with the Energy Start label.
While they may seem costly at the time of purchase, they help you save in the future by making your business more energy-efficient and eco-friendly. Most of these appliances also come with government-sponsored rebates and are eligible for green energy tax credits.
8. Go Online
The web can help you save, save and save in your daily operations. For example, you may already be using emails to send and receive messages and greetings instead of postal services and saving on time and postal costs. Similarly, you may want to consider conducting long-distance meetings, conferences, and even interviews over online resources like Skype and Webex.
This applies to your marketing and advertising efforts as well. Set up your own website, and use social media platforms and SEO-optimized blogs to market your business. These are much more cost-effective compared to print media. Depending on your target audience, adjust your marketing strategy (traditional or social) so your consumers can reach you and potential customers can find you.
9. Reduce Your Inventory
For several businesses, leftover inventory becomes a major expense. Reducing your idle inventory levels may be a good idea. Aside from that, you should try to increase the inventory turns each year as cycling through your inventory more often reduces the risk of products getting too old or expiring before they are sold.
10. Manage Employee Spending
You need to monitor how much your employees are spending through you and also figure out ways in which you can cut costs without making them uncomfortable. Set guidelines, activate pre-set limits and alerts and keep a track of the monthly expenditures. This can help you prevent costly mistakes.
Apart from that, allow your employees to work from home at least one day a week and watch how quickly your electricity costs drop. However, do so only if you feel that it will not adversely affect the productivity of your business. If it works out, it may also allow you to move to a smaller office and save on rent.
Bringing down costs is always on an entrepreneur’s mind and is one of the signs of sharp business acumen. While controlling expenditure is important, do make sure you do so in the right areas and to the right extent. Cutting costs too much and too often may backfire and leave you spending more on things you may not need. Reducing expenses should only result in profits. The above tips should help you achieve both these objectives.