Cutting your small business expenses will help to boost your profit margins and improve your financial health. You can use the money you save to build up a cash buffer in your business, expand into new marketplaces, and reach your financial goals. We’ll share some innovative, cost-saving ideas to bring down your expenses and enhance how you manage your small business finances. Let’s get into it.
Review Invoices You Owe to See If There’s a Discount for Paying Early
Many suppliers and merchants will provide you with a small discount to incentivize you to pay bills as soon as possible. Look through your invoices for opportunities to save money by paying them as soon as you receive them.
Investigate Discounts for Buying Stock in Bulk or Through a Group Purchasing Organization
Many suppliers and wholesalers will provide discounts if you order minimum amounts. You’ll need to be careful with this, because if you don’t sell your inventory quickly, you’ll be locking up value—so make sure you forecast likely demand. You can also take advantage of Group Purchasing Organizations and pool your orders with other businesses to get bulk discounts.
Take Advantage of “Just in Time” Ordering
On the other end of the spectrum to “Buying in Bulk” is “Just In Time” ordering. This approach means you can keep minimal inventory in stock on the understanding you’ll be able to replenish products very quickly as soon as they are sold. Just like buying in bulk, you’ll rely on good inventory management to model likely demand and maintain low levels of stock.
Compare and Contrast to Find the Most Competitive Prices
There’s a low barrier to entry in many business niches, and all organizations want to sign up new customers. Use this to your advantage. Define exactly what products and services you need to buy, and do your research.
Create a spreadsheet of prices, together with advantages and disadvantages of each vendor. You’ll also want to take into account the speed and quality of what they provide and calculate how that can add value for your business. Remember, too, that it’s always worth asking for a discount.
Have Employees Work From Home
Due to the global pandemic, more businesses are giving employees the option to work-from-home than ever before. Not only is this good for employee morale and productivity, it’s great for minimizing small business expenses. You won’t need to rent additional office space for workers, you’ll reduce the overheads on your utility bills and other costs.
Barter with Other Businesses That Provide Necessary Products and Services
Instead of directly buying and selling with another business, see if you can exchange products or services. For example, if you’re a digital marketer, you could put together an ad campaign for a computer business in exchange for getting your office network set up.
Partner with Other Businesses to Provide Complementary Services
You don’t have to do everything yourself. Look for businesses that offer products and services that could work with yours, and consider partnering with them. This allows you to refer sales to each other and share marketing expenses, while providing a more end-to-end customer experience.
Reduce Your Utility Bills
Electricity, gas, and other bills can add up. Reduce your consumption by purchasing energy-efficient equipment and appliances, insulating your workspace, and switching off all equipment when not in use.
Automate Every Business Process You Can
The more time you spend on admin, the more it costs you in terms of forward-thinking and new opportunities. Look for ways to streamline your business processes so you can focus on creating value. This might include:
- Getting your various business applications and systems to share information with each other, through built-in integrations or third-party services like Zapier.
- Centralizing all of your business reports and analysis in one place so you can make decisions quickly.
- Standardizing responses to common questions and communications.
Use Free Software to Run Your Business
There’s plenty of excellent, free software out there that you can use to manage your organization. Some good choices include:
- Free accounting software to stay on top of your bookkeeping and invoices.
- Project management software like Asana or ClickUp.
- Note capture software like Evernote or Google Keep.
- To-do list software like Trello or Todoist.
- Free office suite software like Google Calendar, Gmail, Google Docs, Google Sheets, and Google Slides.
- Customer management software like HubSpot or Capsule.
- Communications software like Zoom, Skype, and Google Hangouts.
Consolidate and Restructure Your Loans
You can consolidate disparate business loans together, restructure your loans, and possibly get better repayment terms and interest rates. You can find an ideal, specialized lender for your small business needs to get affordable financing.
Outsource Tasks and Activities to Freelancers
You don’t need to do everything in-house. You can hire freelancers on a short- or medium-term basis to cover various types of business needs including:
- Graphics, design, art, illustration, photography, and user interfaces.
- Digital marketing, SEO, content management, advertising, email newsletters, local search, and eCommerce.
- Writing, editing, proofreading, ad copy, white papers, eBooks, and website content.
- Video, animation, visual effects, production, and editing.
- Programming, application design, integrations, website building, mobile apps, and chatbots.
- Virtual assistance, data entry, research, project management, consulting, and branding.
Consolidate Your Insurance to Lower Your Premiums
You can often get a discount on your insurance premiums if you have different policies through the same provider. For example, you might have general liability and professional indemnity insurance, and you could get a reduced premium on each.
Start Cutting Small Business Expenses Today
These cost-cutting ideas will provide you with a great starting point. As you start to reduce your expenses, regularly review your bank accounts and bookkeeping software to find even more opportunities to save.
Need more one-on-one advice on securing small business financing? Check out our network of non-profit lenders, organizations, and financial institutions to see how Connect2Capital can help your business keep growing.