When it comes to improving your business finances, there are two basic approaches: generate more revenue or cut costs by finding ways to save money for your business. Or, of course, you can do both.
As far as increasing revenue is concerned, you can boost sales on existing products or services, or you can develop new income streams. But more revenue only helps if you’re achieving profitability. No matter what you do to increase revenue, minimizing business overhead and other expenses is crucial to maximizing profits. But be careful not to cut costs in ways that reduce the quality of your products or services, or of your customer service.
Below are some effective ways to save money for your business that don’t jeopardize the quality of what you deliver to your customers or clients. If your company is struggling to stay viable, these can help you turn things around and focus more efforts and resources on generating more revenue. Even if you’re operating successfully, they can help you grow.
How to Reduce Business Expenses
- Switch from traditional advertising like television, radio, and print ads to more affordable (and often more effective) digital advertising through search engines and/or social media platforms
- Outsource whatever you can to limit overhead from employee costs and office needs
- Look into downsizing office space and resources by allowing some employees to telecommute (working from home has been shown to increase productivity, so don’t be afraid of it on that account); even part-time telecommuting reduces utility bills and other in-house overhead
- Try renegotiating with vendors and shop around for better deals (often, if you get an appealing offer from someone else, existing vendors will match it to retain your business)
- Renegotiate or comparison shop for better shipping rates if you regularly send packages
- Renegotiate or shop around for better insurance rates; check with your trade association about whether you can get a lower group rate through them
- Accept higher deductibles to lower monthly insurance premiums
- Pick up items you generally have shipped or delivered
- Buy office supplies in bulk; if you don’t use enough of certain items, ask neighboring businesses if they’d be interested in splitting orders with you
- See where you can shave off maintenance costs, like scaling back from daily to weekly on professional cleaning services
- Inquire about discounts for early payments or full upfront payments on supplies, services, insurance, and other overheads
- Offer to barter when it makes sense; for example, if you need renovations to your office space, can you offer equal value in free services to the provider?
- Turn off lights, computers, power strips, environmental controls, etc. when they’re not needed; ask your utility company about a free energy efficiency audit on your properties for insights into how to save on your energy cost
- Understand the importance of maintaining an inventory of office supplies; track spending and usage; limit access to a few key employees
- Brush up on business deductions and work with a professional accountant to minimize your annual tax burden
- Shop around for business credit cards or lines of credit with lower interest rates (especially if you run balances from month to month) and/or better rewards programs
- Consider eliminating hardware and software expenses with lower-cost cloud-based solutions; also, look for free or low-cost software alternatives to pricey programs
- Go digital, if you use a lot of forms, by downloading them and/or adding online forms to your website instead of printing and mailing hard copies
- Hire talented interns and recent graduates who are happy to accept entry-level salaries
- Stop having meetings for the sake of having meetings, hold them when they’re important, and keep them as short as possible
