The cost of doing business is on the rise and reducing business costs can make a big impact on your bottom line. Whether you’re a start-up or a well-established business, it’s important to devise a plan to cut down on business costs. This needs to be done without negatively impacting your customer service or product quality. Keep this in mind when identifying ways to lower costs. Here are 9 tips for reducing business costs.
1 Evaluate your budget
With costs rising more and more each month, you may not realize how much it’s impacting your P&L until it’s too late. Evaluating and creating a new budget can give you a clearer idea of the money flowing in and out each month and is the first step in identifying areas to save.
2 Go Paperless
The price of paper, ink, mailing supplies and postage can really make an impact on your cost of doing business over time. Going paperless can help you reduce this cost. A switch to digital correspondence and digital invoicing when appropriate and safe can help you cut costs. A digital workplace that is less reliant on paper and print is also better for the environment.
3 Evaluate your location
Do you really need all of that space? If not, you may be able to lower your office space cost. Is it possible for some staff to work from home and still be as or more productive? Make the most of your physical space and evaluate the need for the space you have. This can be a good way to realize significant savings.
4 Consider purchasing refurbished equipment and furnishings
Buying everything brand new may not always be the smartest choice when you’re trying to save. According to an article in Entrepreneur Magazine, by buying refurbished equipment, you might realize savings that average 30 percent to 50 percent of the selling price for the same equipment in new condition. Refurbished equipment is typically fully inspected and comes with a warranty for greater peace of mind.
5 Shop around and compare prices
As a business owner, you need to stay on top of the cost of goods. This means constant monitoring and price comparison. Don’t be shy about asking your vendors for a discount when warranted. This goes for business insurance as well. While insurance is a necessary cost, you can sit down with your broker to evaluate your coverage and shop for different insurance agencies. You may find a surprising difference in rates between companies. You may also find your vendors and suppliers are willing to negotiate to keep your business. It’s smart to examine and negotiate all bills to find savings.
6 Cut staffing
An effective way of reducing business costs is cutting back on staff when possible. With rising healthcare and other labor costs, cuts in this area may be necessary. Replacing full-time staff with a few freelancers can be a cost-effective way to supplement staffing. Freelancers or independent contractors who specialize in specific areas of need can be instrumental in providing you with the ability to save on hiring full-time employees. Fiverr is a good source when searching for experienced freelancers. Another way to reduce headcount without negatively impacting business is through automation of processes where possible. Automating administrative tasks, incorporating an automated live chat service, and automating other tasks can help save significantly on staffing. There are internet-based solutions for everything from invoicing and accounting to contract signing. All great ways of reducing business costs.
7 Unplug to Save
If your electricity bills are out of control, unplug unused equipment and turn off lights. Change to energy-saving bulbs and other energy-saving technology. Communicate to your employees the importance of conserving and saving on electricity.
8 Evaluate your software subscriptions
Let’s face it, we all have many subscriptions that go unused. By auditing your monthly software subscriptions, you may be able to find significant savings as you unsubscribe to those not needed.
9 Cut vehicle expenses
With fuel costs soaring, cutting non-essential business travel can help reduce vehicle expenses. If you find yourself in need of a new business vehicle and finances are tight, consider leasing. It may provide you with a lower monthly payment.
Consider Benchmark FCU for your business borrowing needs
Benchmark Federal Credit Union now provides non-real estate business loans for creditworthy businesses and business owners through our partnership with Nu Direction. Tap here to learn more about our small business loans.