Unnecessary costs can kill any business, but especially those just starting out. It’s important for your business’ health that you reduce all unnecessary costs. You wouldn’t waste you own money, so why would you waste your businesses?
Reducing costs is probably not what you think. People will think of firing employees or being cheap, but when analyzing where most of your money goes, you may be surprised by what’s eating your budget.
Reducing costs will save money, and in the long-term it can help grow the business in a smart, healthy way.
Here are nine proven ways that you can reduce business costs:
Track Every Penny
Before you create a strategy of to reduce costs, the first thing you need to know is where your money is going.
The most efficient way to find out is track all of your spending, every penny. This should be comprehensive, and include not only how much workers’ wages and benefits costs, but even simple things like office supplies and coffee.
It may sound like crazy, but maybe you’re spending unnecessary money on paper or general office supplies. This stuff can add up quickly. When you track everything, it’s easier to identify money-wasters and then fix the problem.
Go Paperless
The necessity of paper in the business world is fading out.
Going paperless will not only save you money on supplies, but it will also keep you connected with the modern world, and streamline a lot of your processes. When you replace paper-heavy processes like invoicing with an electronic solution, it can seriously cut down on your paper usage and even save you time.
The benefits of going paperless are not only financial but also environmental. You can also use this strategy on your marketing since customers are more concerned about doing business with a business that cares about the environment.
Tech Up
Another great way to reduce business costs is to better use technology. This doesn’t apply to going paperless only. You can better use technology by analyzing all your expenses and looking for a better way to do things that shore up process efficiency.
For example, you can ditch your landline and use Skype or another service that will offer you a phone number for fraction of the cost. You can also outsource work online so you don’t need to hire more people for simple work.
Ultimately, the real efficiency comes in with automation software. New software for businesses can help you track workflow, payments, project scheduling, meetings and more, all in the same place. Automation software really makes businesses run more efficiently.
Online Marketing
Online Marketing costs a fraction of what you’d pay in a local network or physical advertising space in a prominent part of your area. When compared to a national network advertisement, it’s pennies on the dollar, and can be more effective.
There are many different ways you can market your business online and whatever way you choose it’ll save you money.
Besides the range of an online marketing campaign is big. You can target a specific demographic and keep track of how many people your ads are reaching and converting, all for a small sum of money.
If you don’t know how to do this by yourself, you can also hire specialized companies to run the ads for you. The point is, online marketing will bring you new customers and reduce costs.
Use Freelancers
You should know what employees are crucial for your business and which ones are not so as essential. This means that sometimes you have people that don’t justify the costs of you having with them on the payroll.
This is not about their job performance, but their job position. For example, you don’t need an in-house marketing team unless you’re a big company. You can reduce costs by hiring a freelancer to do all the work for you.
Within a few years, almost half of the US population will be freelancers, so you should take advantage of that and outsource as much work as you can. You also have the advantage of not being on the hook for healthcare, and other things that come up when you have full-time employees.
Of course you want to hire a few full-timers, but you shouldn’t be making unnecessary hires.
Barter
Barter involves exchanging a service or good for another. If you have something to offer for your local painter or plumber, for instance, you should offer a partnership in exchange for their services.
For example, if your business is popular on social media, you could recommend their services to your followers in exchange for a discount, or even for a free service.
This can reduce the costs of when you need to do a renovation or fix something. All you have to do is think of something you can exchange that would be of value to the other person so you both can make a sort of partnership together.
Keep Your Data Protected
The most valuable assets companies have now exist on the cloud. You need to make sure that your IT department is on top of keeping all company information secure.
Failing this, you need to have security software in place in case you need to backup or recover lost data in case of emergency. For newer companies, especially, data is more valuable than any physical property.
Plan a Budget
One of the best ways to reduce costs, especially after you’ve tracked every penny, is to plan a budget. But this process can be a guessing game if your business runs inefficiently—you have to know every part of the process, and budget with realistic numbers.
So, make a plan and stick with it no matter what. If you don’t stick to your budget, at the first appearance an unexpected expense, you might be using your personal credit card. And that’s a business no-no.
The only way to avoid all this and reduce costs is to budget everything and make sure you stick with it.
Buy Used And Always Ask for Discounts
To reduce costs immediately all you have to do is to buy refurbished computers and used furniture. It doesn’t have to be bottom of the barrel stuff, but it doesn’t have to be the best either.
A lot of companies get one big client and start spending like crazy. It should be a slow build.
You should also never be shy about trying to pay a little less, and asking for discounts. At the end of the month, your 5 percent discount can save you a lot, depending on what it’s for.
Team Up
It’s getting more common by the day for small businesses to team up. You can, for instance, team up with other local business to share a big office or rent a shared warehouse. Coworking spaces are becoming popular option for startups in a lot of bigger cities.
This way you share expenses and cut costs in the process.
The Bottom Line
Be smart about how you spend money, especially if your business is just starting out. Established companies have a a little more flexibility, but that doesn’t mean they should be shelling out money for frivolous reasons.
Take ownership of your business, and use these tips to reduce your costs and become more efficient.
