These savings tips are idea for small businesses.
By Alexandra Walsh
Everyone is attempting to tighten belts and save money.And for small businesses, it isn’t just a matter of lowering expenses on occasion, but actual survival.
Although the following money-saving tips will be especially effective for small businesses, they can also be applied to any size business and some may even help you at home as well.
Lower the cost of debt
The interest rate charged on debt is more important than the amount owed, so list all debts owed by your company, starting with the highest interest rate and going on down. Pay the minimums on the lower-cost debts, and pay off the highest-cost debt as fast as possible.
Always get bids from three different vendors to ensure the best deal and then ask vendors for 10% off the cost of any item you’re purchasing. You may be able to negotiate better prices on everything from office supplies to the phone bill.
You certainly won’t lose anything by trying, and you may find yourself able to shave several hundred dollars off your monthly operating costs. It never hurts to negotiate because the vendors are asking for discounts themselves from their suppliers.
Prepay January and February expenses in December. The expenses will go on the previous year’s taxes, allowing you to take the deduction 12 months earlier. And if you pay with a credit card, the cash won’t leave your business until January.
Try this for office rent or equipment you might need. The reverse is also true. If you have income coming in December, defer as much of it as possible to January so it shows up on next year’s tax return.
Employees are essential to getting work done, but employee costs—from salaries to office space to insurance—can be the biggest chunk of a small business’ budget. Consider keeping your full-time staff to a minimum and outsource work to independent contractors for the work permanent employees can’t
cover as needed. You can not only negotiate a lower rate with contractors, but your business can also benefit from their more varied experience in their fields of expertise.
When that cash supply gets low, as it tends to do in small businesses, don’t close the door on getting what you need. Consider the age-old practice of bartering. Maybe you’re able to barter with a local garage to service your vehicles in partial exchange for annual water well testing services.
Going green is not only a great marketing move, it’s also a smart financial move. You can make simple changes such as keeping equipment on a power strip and turning it off when not in use, or replacing your existing printer with one that prints on both sides of the paper, thus reducing paper waste and cost.
Since the object of many environmentally friendly changes is to save energy, and you have to pay for the energy your business uses, if you can reduce energy use you will also be reducing your costs.
Open source software
Software, from the basic to the complex, is essential on some level in every business today. Before you spend hundreds on software purchases or updates, check into the free open source alternatives. You can find open source software for everything from photo editing to invoicing to accounting, project management, and document creation.
Some companies offer bundled services that include phone service, cable, Internet, fax, and web hosting. Bundling two or more services from the same company can save your business hundreds of dollars a year.
Buy in bulk
Shop the cheapest deals on supplies and purchase from bulk warehouses or online suppliers to save money on both the product cost and the shipping cost. Analyze your ongoing expenses and pinpoint the ones that are purchased randomly or at middleman suppliers. Check into bulk buying and see if
you can’t save a significant amount on those frequently used items.
Renegotiate your lease
If you don’t own the building in which your company is headquartered, try renegotiating your lease to save on costs. Leasing fees can be one of the biggest expenses small businesses face.
Review all expenses
It’s smart business, but it’s often overlooked until tough economic times force you into it. Small cuts in ongoing expenses can add up to large savings over the long term. Review everything that isn’t providing a return on your investment, cut back to the bare minimum, and completely eliminate anything
You can often find a cheaper way to provide the same employee perks. For instance, a $900 per year water cooler expense can be replaced with a filtered water pitcher. From $900 to $30 is a significant savings, and if you can accomplish that sort of financial savvy in more than one area, you can turn
your business into a lean, profit-generating machine.
To avoid the big upfront costs you’d face when purchasing equipment, think about a lease. You not only conserve your company’s cash, but can save a substantial amount of money in repairs, upgrades, and maintenance since many lease agreements cover these expenses.
Manage employee spending
The misuse or abuse of company-issued credit cards occurs among employees at every level. By setting guidelines, activating pre-set limits and alerts, and monitoring your monthly spending reports—you can save money and avoid a lot of costly mistakes.
Become a landlord
Do you have unused space in your building? If so, investigate the possibility of subletting the space. Sharing the rent or mortgage and not paying for unused space are two good reasons to discuss it with your landlord.
When looking for seasonal or general office staff, look into hiring young people or working with a college for internship opportunities. College interns receive college credit while they work in your office or business, reducing your payroll and increasing your productivity.
Word of mouth
The best and least expensive form of advertisement is word of mouth. Encourage your customers to make referrals and include customer testimonials on your website.
Virtual marketing newsletter
Use the Internet to expand your advertising reach without expanding your budget. Company email newsletters can keep your customer base aware of new or discounted services. Your return on investment can be much higher than other forms of advertising.
Become involved in your community. By joining trade associates as well as interacting with your neighbors, you can sometimes do joint advertising ventures, learn the latest industry-specific news, or discover new customer opportunities
From lowering your utility bills to negotiating for cheaper services, these ideas can reduce your expenditures without making your business look unprofessional.
When thinking about making changes, always remember to look for ways to improve your business and optimize your staff’s productivity. Once you have accomplished that, you will often find that your expenses decrease as well.