There are two ways that businesses build their profitable growth.
The first one is to increase their sales. This one gets most of the attention as many businesses focus on different aspects to get more sales.
However, this side of the equation is not completely under your control. And that’s where you need the second way i.e. saving money.
Cutting costs, and spending in a controlled manner but also without affecting the customer experience or cutting down the business.
To understand how to achieve that, here are some best ways listed to reduce your expenses in a small business.
Effective Ways to Reduce Expenses In Business
According to Bloomberg, around 8 out of 10 small businesses end up failing within their starting 18 months.
The reasons are quite simple, most businesses focus on making their sales grow and forget the importance of lowering their cost in business.
It’s important to maintain profitability and for achieving it successfully.
Well, here are some of the straightforward ways that you can apply to your business in order to cut expenses.
1. Review The Expenses
The expenses, where your business invests, and what are the things you are costing. Do not leave anything, including the small to smallest ones so you know the exact cost of your operation.
Without tracking you can’t manage anything. Keeping a track of all your expenses can help in understanding all kinds of holes where you are going.
You can also take the help of accounting software instead of manually handling this. With this, you can easily find the options where you can do cost-cutting.
Make sure you are not excluding any expenses and it doesn’t matter what kind of it is.
2. Check For The Expenses Not Needed
For small businesses. Expanding their business is crucial. Many owners make the mistake of not knowing where the expense is unnecessary. Sometimes you have started something but over time, you don’t need it anymore.
When you track all the expenses, you can easily understand which expense is not needed. Review your budget and mark all the extra expenses you are doing.
It can be something like purchasing a subscription of magazines that you did but no one is reading anymore.
3. Understand the 80/20 Principle
Pareto’s principle of 80/20 states that you should have 80 % outcomes caused by doing 20% effort.
Use this principle to make sure your expenses are within the 80% of activities that are not making income for the business.
4. Cut The Traditional Advertising
Tradition advertising is effective, but you have alternatives in today’s world. you can consider choosing those. Also, these alternatives are affordable and can be customized.
As compared to Traditional Advertising like TV ads, printing, putting up hoardings, etc, are expensive.
Alternative options like Facebook ads and Google Adwords can help you advertise your services and products to your desired audience.
Also, you can keep the target audience filtered according to their specific city, demographics, age group, and many more.
As compared to old methods, this one brings much better results without costing too much.
5. Create More Of Partnership
There are lots of companies that came together with different brands to promote their product.
However, make sure you are partnering with non-competitive companies. Well, this type of partnership has its own benefit apart from cutting the cost of the whole advertising process.
Also, make sure that it benefits both of partners mutually. It will keep the results much more effective.
6. Reduce The Printing
Printing is not cheaper, especially when lots of other stuff is needed. You will need the cartridges, inks, refills, and other items to print the items.
Not just you are using too many funds but also maintaining it is not a cheap solution either.
There are lots of times when the printers don’t work or break down. You spend on recovering or even purchasing a new one.
Using the papers is not cheap, and also it needs storage space which is costly too.
This whole thing is costly and since the digital era is advanced, you can simply store all the backed up data in hard disks, clouds, or other storage software. You can reduce the time of using the printers.
7. Outsource Your Bookkeeping
For business, the bookkeeping process is important and to record, day to day operation is crucial for the financial months.
However, the whole process is tiring and puts too much stress on the person who is handling this.
Doing any kind of mistake can cause problems. You can end up getting into legal trouble which is costly.
Well to make sure you are not getting too wrapped up in this, you can easily outsource to another company.
This will cost less money especially if you are choosing abroad that has a lower cost for such works.
A Lot of broad company’s like in India, have lower wages but bright minds to handle the whole work for you.
You can save a lot of money and also focus on your business.
8. Early Payment For Invoices
Don’t wait for the end dates to pay the invoices. There are a lot of suppliers who are ready to offer discounts and reduce the price if they are receiving the early payments.
Also, these supplies have to struggle to get cash at some duration during late payment by their customers.
To reduce their tension, they are ready to offer discounts. You can use this deal for your business and cost-cutting.
Not to forget that early clearing of your invoices also helps you in building better relations with your suppliers. This is helpful for future deals too.
9. Consider The Interns
Well, in The economy of today’s world, lots of graduates are looking for jobs. Well, you can offer the internship to them. The idea here is, they are willing to do any kind of work for improving their resume and getting more prices.
Understanding this can give a win-win solution for both. There are lots of bright and talented people who can do the work and help the business to grow.
Hiring interns is much more cost-effective and you can save a lot of money. Well, make sure to give them proper training before they start.
10. Reduce The Travelling
Since the pandemic hit, traveling is already reduced. However, even before that, it was much better to consider where you really needed it or not.
Travelling can cost a lot, especially when you have to do frequent meetings. Consider the points and see if you can do it on Skype or any other application.
Video conferences are money-saving and you can do your work without any hassle. It gives you much more accessible and you can do it anytime.
Taking trips when you don’t need to, can cost the company money and time. Also, it includes hotels, planes, etc which is not cheap either.
11. Let Employee Work Remotely
Lots of companies have the once a week offer where the employees can work remotely. For the company, it comes with lots of benefits. Also, you can save money and can reduce the electricity cost too.
In case you have a smaller space for the workplace, having employees working remotely gives you better production value without needing the space.
Also giving them the practice will help in keeping them comfortable from working in both ways.
12. Outsource Your Administrative Work
Most of the administrative work can be performed by the virtual assistant. You can outsource the administrative tasks to other companies which save you time, money, and effort.
For someone who has the responsibility to take care of the bsuiness, conducting interviews for looking at high turnover employees can waste too much time.
You can contact a professional from other countries to do the work for you.
13. Get Freelancers
There are lots of people out there who are talented and have bright as well as creative thoughts. You can use this creativity and people with talents for your business.
They are also ideal as with freelancers you can get access to different people who are in different countries. Hire such freelancers to get better work results, as compared to the staff, they are much affordable.
14. Go With Used Equipment
Well if there are chances or big effects, you can consider buying the used equipment. Especially refurbished items are affordable and give you the same results as the new ones.
You can buy laptops, computers, faxes and other things. There are lots of things that you can consider and it will help you in saving money too.
Depending on what your company does, you can purchase the items which are gently used. It can be :
- Office technology including copiers & printers
- Storage equipment
- Company cars and Delivery vans
- Refurbished items
- Tablets, smartphones, and laptops
However, ensure you are not purchasing something exclusively needed for the business.
15. Ultize The Space For Work
If you have an office that is too much space and you renting it for too long without copying the space. It’s important for you to understand that the rest and unused space is wasting the money you are already paying.
You can either rent the unsued part to some other company or share the cost with others.
If you are a small business, it’s much recommending to get a coworking facility instead of renting the entire office for yourself.
16. Use The Online Tools
There are lots of businesses that spend tons of money purchasing the license for the software. However, there are free tools that you can consider using.
For example, Instead of spending money on buying applications for your business that can give you more access to data entry, you can consider using Google Docs as ist free and you can get the benefits of both worlds.
Well apart from this, there are lots of good and useful tools online which offers you free service. Even if you don’t want the free services, they have negotiation deals, so you can get those instead of investing in the license.
17. Consider The Automation
There is a lot of work that a bsuiness owner needs to do, however, if you create a list you will get to know that there are lots of things that can be done by automated software.
Works like redirecting alls, updating on social media, etc might be taking too much time, you can use the automation option for this.
This can save a lot of time without affecting the work and keep your productivity.
18. Create Your List & Buy-In Bulk
Create a list of things that your company needs on a daily basis or for the basic operation. Even though you are not considering this fact, maybe you are investing in these small things which are taking too much of your money.
Creating a list of things will help you in understanding the items that are needed on the repeat. It includes your office supplies.
When you purchase the office supplies, again and again, chances are you are overpaying it. The suppliers often change the rate or overpriced it
When you buy in bulk, you can get the benefits like deals, discounts, or offers. Instead of purchasing every week, get everything in one purchase.
19. Drop The Landline Idea
Do you have a landline? Consider the times when you needed or even used it in the last few years?
Since there are lots of communication options, landlines are outdated. However, there are chances that you still have it. You can use different VolP services that are free of cost and can be used for the business.
Not just are they convenient for use, but also you can save a lot of money. Landline is expensive and when you don’t need it, there is no point in having it in the first place.
20. Revalutaion The Expenses
This includes the complex expenses, which are multi-tiered in the services. It’s important to look closely at the expenses you are making and what you need.
For example, if you paying the phone bill, you are paying different other services too. It can be the messaging, data, or airtime minutes per month.
Revaluate the cost you are spending here. And if you are not using it, call your provider to cancel all those extra services.
You can also ask for the discounts that might be going on.
21. Outsource The Less Needed Department
If you have some departments that are not needed or have less work to do, you can consider the option of outsourcing them.
However, make sure it’s not affecting your core operation. There are companies from different countries that can handle the same work without needing too many expenses and save the hassle for you.
Apart from this, you can get much efficient work and keep your workflow smooth.
For example, many companies have outsourced their HR department and let the other companies doing that work on their behalf,
22. Use The Word Of Mouth Marketing
There are a lot of methods that you can use for advertising. Since printing media is not just the one, you can also consider the mouth of marketing. It’s beneficial for the business as people trust the people more when someone close recommends to them,
Word of mouth also brings marketing through promotions such as coupons, promo, and referral codes.
23. Outsourcing The IT Operations
Handling the IT department in the house can get expensive for a small business.
Also, most of the businesses don’t have much ability to handle the operation when it comes to IT unless you are one of those companies or related to the department.
Since it’s not your core business, it will take too much time, focus, and fortune.
Finding people who know about this and getting them to assign can be hard too. So why even bother? There are lots of specialized companies that can handle this work.
Outsource your work so you can focus on the core stuff you need your attention on.
24. Review Your Maintenance
For a small business, keeping your workplace clean and maintained is important. However, there are other things you might be doing for the maintained purpose that is not needed.
If you are using regular maintenance and cleaning services, you can reduce it to certain dates. Also, you don’t need the services daily; keep them when you feel necessary.
For example, if you have a cleaning crew that visits your office weekly for cleaning. You can shift to twice a month. With this, not just you get better work but you also save a lot of money for the services you are spending.
Also, some work can be done much quicker, and reviewing this will keep your budget maintained too.
26. Team Up With Trade Association
There are lots of trade associations that can help you get more understanding of your local. With this, you can get more opportunities that can help you save money.
However, make sure you are doing the research first and make sure you are getting the right deal. Also, make sure to focus on the cost it comes with; most of the trades have their entrance fees. This will give you long-term money-saving and will be good for the future.
27. Choose Modernize Marketing Methods
There are modern marketing methods that can give you the result you are looking for without costing you.
For example, make sure you have an email list and keep it updated. Get a referral program and focus on people. Here it would be best if you did more networking instead of advertising.
Customers likely buy products if it’s recommended by someone they know. It gives them much more confidence too.
It’s important to understand the methods that are used in modern marketing. You can also consider this one to outsource too.
28. Use The Time Strategies
Optimizing efficiency for your team and yours can help boost productivity. When you waste time, you are wasting money too. Make sure that you are using the work hours efficiently.
Focus on your employee and their work activities. Also, you can use different methods to keep the distractions out, including time spent on social media and other sites.
However, focus on motivating them, so they understand how to use every second for better results.
29. Prioritize Your Quality
When it comes to saving money, don’t forget that quality is important. In any case, it should not be compromised at any cost.
Quality always tells the service and products you are offering. Keep your focus on improving the quality, add strategies, and keep your customer satisfied.
Quality makes you different and stands out from the crowd. When you have a quality product, you can charge higher fees and even change it in the dominating market.
30. Avoid The Interest
Ensure you are not paying interest; it’s an enemy of your business. Some suppliers can overwhelm you with interest and try to offer very low-interest deals that you might pay upfront.
Interest should be ignored at all costs; instead of focusing on this, avoid it.
31. Outsource The Weak Sides
There is no doubt that every business has its weakness. It’s sad, but that’s the true reality of the business.
Observing the books and recording the employees’ productivity will give you an idea of which department is lacking.
You can get the other company to outsource to other companies. Use the department which is slowing down the work.
Outsourcing your business department, which is slacking to professional ones. They can handle the business and you can focus on your work.
32. Do The Health Changes
Chances are you might be spending too much on health coverage for your business. You can consider using new plans and cutting down when it’s needed.
But here is the point: don’t do something that can hurt your employee.
There is health care insurance that can give you the best coverage and it’s beneficial to replace with your old traditional.
33. Reduce The Use of Paper
Paper use is not just costly but also you can save the environment. It’s also good for keeping the cost under control.
However, ensure you are not using the pages for waste. Here are a few points that you can consider too :
- Make it on default on printing on double side
- Reuse your waste paper for notes or scratch
- For printed reports, use shrink fonts and tighten margins
- Switch to secure electronic file exchange instead of traditional courier services
34. Control Your Location Expenses
Well, there is a chance that not all of your economics are created with keeping equality in mind. There are some cities and locations which are good for the growing business, but there are some which are not.
However, if moving to some other location is not in your option. You can identify the different ranges and how you can control the expenses.
It includes the basics first, and that is your commercial rent. The next is the taxes you pay on local sales, property taxes, and income taxes.
The next is labor costs which means if you are running a restaurant, labor costs will play a huge role, and if you are running a business in an expensive location, the wages can be high too.
35. Everything Is Negotiable
Everything in business is negotiable, and it’s important to remember that. Unless it’s not on a binding contract, every price can be negotiated.
Entrepreneur has their benefits If you leverage the point and get an alliance with other businesses. Mostly, the owners look out for each other, and you can get discounts easily if you know how to negotiate easily.
Frequently Asked Questions ( FAQs)
Why do small businesses need to reduce costs?
For business, it’s important to have a procedure that can make cost reductions. It helps increase the profit and gives more leverage to save money. Since you can’t control the operating expenses, you can reduce the cost on other points to keep the price under control.
What are the results of reducing costs?
The reduced cost producer can help the small business to regain control over the expenses and money. This is important for the business to grow and offer the products if they have the upper hand in their financial department. It brings more profit and opportunities and gives more access to grow for a small business.
What does cost-cutting mean?
The cost-cutting is a provider and the measurement that a company implants on their expenses. In this, they focus on points that are adding extra expenses without bringing any results. Also, they aim to boost profitability and reduce the expenses.
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Business, marketing, and blogging – these three words describe me the best. I am the founder of Burban Branding and Media, and a self-taught marketer with 10 years of experience. My passion lies in helping startups enhance their business through marketing, HR, leadership, and finance. I am on a mission to assist businesses in achieving their goals.