17 Realistic Ways to Cut Down Business Expenses
In running a business, entrepreneurs should not just focus on increasing sales. They should also reduce too many expenses to maintain or boost profitability. Based on a study by Bloomberg, 8 out of 10 small businesses do not last for over a year because of too many costs. In the United Kingdom, 4 in 10 small businesses fail within five years.
Well, now is the time to not just focus on sales, but also to reduce expenditures. Here are 17 realistic ways of cutting down business expenses:
Maximize office space
Always allocate your office space wisely. Most businesses spend too much on leasing commercial spaces because they fail to manage their location properly. According to CCIM, every worker should be allocated with just 185 square feet. They should also go for collaborative workstations and multipurpose rooms and equipment.
Hire the right number of people
While it is important that you have people to work with you, it is equally important to hire the “right” people. Employers should go for the skilled ones instead of hiring three people doing multiple functions that can be done by one.
Work with freelancers
Hiring freelancers and independent contractors will also help you reduce costs. Basically, you are not obliged to provide them with health insurance benefits, sick and vacation leaves, pre-tax retirement accounts, and other benefits that full-time employees enjoy. On the other hand, choose the right freelancers as some of them are less loyal and may be committed to two or more projects.
Take advantage of interns
Take advantage of interns…in a good, professional way. Schools and organizations are sending interns to furnish their skills. This will be an additional to your workforce. Most interns do not require payment for their labor. However, you need to invest time in training them so they do not interfere with business productivity.
Try X-deal agreement
X-deal or exchange agreement is most common in design and multimedia works. But some companies are already adopting this style. In X-deal, companies agree to exchange products and services. For example, a restaurant agrees to sponsor the food of the guests in an event by a construction firm in exchange for free marketing and advertising.
Buy company vehicles
One of the greatest expenses of businesses is travel or transportation. Some employees are still riding public transportation to meet clients. Further, products and services are being delivered by a third-party shipping firm. It is best that businesses invest in company vehicles to make transportation more convenient and cut down travel expenses.
Invest in technology
The best impact of technology on businesses is increased productivity and efficiency. Technology helps a lot in business operations. Computers automate certain functions. Instead of hiring bookkeepers, computers can do bookkeeping through certain software. In manufacturing, equipment can produce more materials than workers manually crafting the products.
Use digital marketing
Marketing is very important. However, it may really be costly. Good thing we have internet now. Marketing is way cheaper than before but still in best quality. There are various digital marketing strategies available. If you want to save a lot, go for social media marketing. Over 4 billion people are using social media now.
Go for paperless transactions
Printing is so ‘yesterday’. Now, we can have everything online. Reducing paper use is an effective way of cutting down costs. Instead of printing too much paper, why not produce digital copies. Besides, most people now are using smartphones and other mobile devices. With this, you are not just saving your business but the environment as well.
Save the environment, save your business by saving energy. It is advised that businesses are conscious of their energy use. One of the biggest expenses of businesses goes to energy fee. Practice greenways by turning off the appliances that are not used, use solar panels for power, turning off lights, buying energy-efficient appliances, etc.
Buy refurbished equipment
A company is not required to purchase brand new stuff to run a business. Actually, there are hundreds of gently used and refurbished equipment out there that still works like brand new. This includes office printers and copiers, smartphones and tablets, delivery vans and company cars, furniture, etc.
Manage payables on time
There is so much advantage if you keep up-to-date all your payables. Experts suggest that businesses should pay invoices on time or even early. Paying early is healthy for your cash flow. Further, it will skip your company from paying late-payment charges. Payables include supply costs, loans, and debts, among others.
Boost employees productivity
If your employees are not productive, more time and money are put to waste. That’s why it is very important that you boost their productivity and efficiency. Set little goals for them. Moreover, provide training, workshops, and teambuilding activities that will improve their skills and expand their knowledge.
Don’t sign the contract yet. Test your convincing powers. Always negotiate in simple to complex transactions. Is this the final price? Can we have 5% discount on all these supply purchases? How about we move to another supplier? Most suppliers are open to changes especially if you are a loyal customer.
Buy in bulk
If you are looking for supply, always buy in bulk rather than by piece. It will really save you a lot. There’s a relevant discount if you buy in bulk. The wholesale price is different from the retail price. On the other hand, be careful in bulk purchases especially those items with expiration.
Explore other suppliers
Don’t limit yourself to one supplier. Outsource the market. There are hundreds of providers in the world. Some of them offer greater deals than your supplier. So, make sure you have two, three or more choices.
Get rid of unnecessary stuff
Reflect on some items that you order from your supplier. Do you really need them? Will the company still survive or work even without this stuff? These are the questions that you should ask yourself in order to cut down expenses for unnecessary things.