Spending too much money can quickly bleed your business dry. If it’s time to evaluate your budget and cut costs, consider these money-saving tips.
By Darina Murashev
You should carefully review your advertising expenses for waste. Evaluate each channel and determine whether you’re seeing a good return on investment. If not, cut it and perhaps funnel some of the savings into a more effective channel to get the same returns for a lower investment.
This approach extends to all forms of advertising, from Google Ads and other online advertising to local billboards and flyers. Be stingy with your money and look for the two or three channels that offer the biggest return. Start with those, and as your business grows and your bottom line increases, you can expand into other areas.
2. Office Supplies
While having every supply you might conceivably need on hand and ready to go can be convenient, it can also be costly and wasteful. If you send a fax twice a year, you probably don’t need that expensive fax machine in your office. Instead, take your documents to a shop and have them sent on those rare occasions that it’s necessary. You can also save money by looking for deals on supplies. Physical supplies are often cheaper around back-to-school time, and you can get great deals on software if you put in a little effort.
Besides avoiding unnecessary supplies, you should also consider whether you’re using the essentials in a cost-efficient way. For example, stop printing so much. Instead, send documents as email attachments, or provide a copy to each department rather than each individual employee.
3. Rent and Office Space
One of the biggest areas of waste in small businesses, especially startups and new businesses, is space. Offices, warehouses, and other brick-and-mortar spaces can quickly eat through a new business’s capital.
Start by evaluating the property you’re currently renting. Do you really need that huge office with the nice view? If not, it may be time to downsize. And even if you do need all that space, it may still be possible to save some money by relocating to a cheaper building or part of town. Although moving does have its own associated costs, they can be offset by long-term savings.
Insurance can be one of the largest expenses for a small business or startup. Consider the types of insurance your business is carrying. Are they really necessary? If so, is your current level of coverage necessary? Have you shopped around to find the best deal on that coverage?
Carefully review the scenarios you’re insuring against. If they’re relatively rare and easily preventable but you’re paying a lot for coverage, it may be best to drop coverage and manage those situations directly.
When it comes time to cut expenses, payroll is often the first category on the list. Staffing a business can be incredibly expensive, so this area is often where the greatest savings can be found. Consider how much you’re paying your employees. You can lower the starting salaries for certain positions to save money as you expand. In extreme cases where immediate cuts are needed to keep the business afloat, you may also consider asking some employees to take pay cuts, although this is probably best left for a last-case scenario.
You should also consider whether the positions in your business are all necessary. It’s possible that you could distribute the workload of any superfluous positions among other workers. In general, you want to keep your business’s structure as simple as possible so you know you’re investing in the right positions.
Whether you’re just starting your business or you’ve been in the black for years, keeping an eye on the budget is crucial. Keep an eye on these five budget areas and you’ll be saving money in no time.
Darina Murashev writes about finance, business, home maintenance, relocation, and big lifestyle changes. She enjoys travel, live music, and spending time in the great outdoors. @doyouhaveabongo.