8 Simple Cost Saving Measures for Small Business Owners
All successful businesses do their best to save money, improve efficiency, and increase profits whenever and wherever possible. This is especially necessary for small businesses on a tight budget. While there are numerous ways to save money, these eight cost-saving measures are among the easiest to implement:
1. Bargain. Bargaining with vendors is one way to save money. Examples are working out deals to buy or sell merchandise in the off-season for less, getting quantity discounts, or discounts for paying your bills early.
2. Get Creative With Credit. Does your company credit card (or personal credit card used for company expenses) have a high interest rate? Even if you have intentions of paying down the balance quickly, sometimes it just doesn’t happen and you end up paying 18% - 29% interest. Get creative by transferring balances to cards with lower balances or consolidate debt into a low-interest bank loan – which frees your credit up just in case you need it.
3. Take Payments Up Front. If you extend credit to your customers, consider getting a percentage of the sale up front. When customers put down 20% and pay the rest over the next 30 days, you obtain better cash flow and reduce the need to use your credit card or line of credit to finance your operations.
4. Lease Instead Of Buying. If your business needs office equipment, leasing may be a more cost-effective option than buying. Many leases cover the expenses of repair when the equipment breaks – and if you use high-tech machinery, it could end up costing you more to buy.
5. Live In The Cloud. Running your business “in the cloud” can save you money on local servers and IT costs, and help make the transition to a paperless office easier. Although the era of the truly paperless office certainly took a lot longer to materialize than most people thought, cloud-based storage systems are now a safer, easier way to manage your business. Operating in the cloud can also make your business more mobile and reduce the expense of rent and utilities for your office space.
6. Rethink Your Bank. Just because you’ve been with the same bank for years doesn’t mean you have to stay with them. Other banks may offer you a better deal on loans, checking, fees, and other charges – especially if you have both business and personal accounts at the same bank or create other opportunities such as discounts for employees who open accounts there. One caveat, don’t close your account before advising your current bank about your possible move. You’d be surprised at how fast they’ll meet or beat competitors to keep you as a customer.
7. Manage Your Risk. Although no business owner wants or expects to be sued, small businesses are frequently the subject of lawsuits. A business law attorney can help build a risk mitigation plan that involves contracts, business structure and insurance.
8. Consult With Your Employees. Asking your employees for their opinions on how to save money can be enlightening. From ordering supplies in bulk to replacing the fancy (and expensive) holiday party with a much cheaper luncheon followed by the rest of the afternoon off (which you’ll discover most employees would rather have…), you will not only save money but also make employees feel like valued team members.
Business owners like you can find ways to shave expenses when absolutely necessary. Although you sometimes have to dig deep, using these simple cost-saving measures can make a difference. Hiring a business consultant to evaluate your operations is also an option and can save you more money in the long run. Give us a call to learn how we can help you manage risk and run your business better.