By Dennis Hung
Business owners thrive thanks to the profits their business generates. Businesses that run at a loss or even a low-profit-margin present problems for the owners. In addition to directly dragging down the owner’s income, low profits make the business’ future success potential limited. Smaller profits make future developments and expansions difficult. Less funds exist to execute the endeavors. Owners solely seeking to increase revenue, however, may only be looking at half an improvement strategy. Cutting expenses boost profits as well. A reduction in spending assists with increasing available revenue.
Figuring out where to cut down on expenses may be a mystery to even experienced entrepreneurs. Cutting costs might involve a bit of struggling. Looking at a few smart strategies others have employed could provide insight into cutting useless costs. Those costs can negatively impact a business, which is why eradicating them should become a top priority.
Certain expenses are non-negotiable. The post office isn’t going to lower stamp prices for a particular business. A landlord, however, may be willing to drop monthly rent fees. The same may be true of contractors and partners who perform work for the business. Renegotiating fees may lead to saving quite a bit of money. Even insurance premiums can be reduced. Looking for new quotes for small business insurance could lead to finding the same coverage at a lower price. Don’t assume all prices and fees are fixed. See what is open to negotiation and then explore negotiating options.
Address Employee Expenses
Cutting employee salaries saves money, but the employees may quit. Hiring new employees comes with expenses that might exceed the costs of keeping the original employees in the fold. Employees do come with ancillary expenses. These expenses are the one that may need to be cut. For example, when the time comes to replace an in-office computer, don’t buy a costly model. Employees may need to work on an inexpensive model.
Changing an employee’s work week from 5 days at 8 hours per day to 4 days at 10 hours could save a lot of money. The presence of the employees could drive up utility and other expenses. Taking the employees out of the office one full day of the week could reduce expenditures. Exploring telecommuting strategies might save even further amounts of money. Online communications and office programs make it possible to perform work duties from alternate locations. Allowing employees to work at home could cut expenses for a business dramatically. Employee productivity may increase, which might drive up revenues as well.
Examine Maintenance Expenses
Paying a cleaning service to straighten out the office every week may not be necessary. Perhaps a change to hiring the crew to clean once a month would be cheaper. The other three weeks of the month can be addressed by someone at the office. While not as thorough, an owner performing his/her own cleaning duties saves money.
Sometimes, spending money on maintenance proves less costly in the long run. Ignoring a minor plumbing leak could lead to significant water damage over time. The eventual final repair work might come with a far higher cost than instituting a quick and early repair. So, don’t ignore critical maintenance issues. They only grow more costly in time.
Change Marketing Strategies
Advertising serves as an expense designed to pay for itself and deliver profits. Unfortunately, certain advertising approaches present a cost-to-return ration that isn’t always preferable. Internet marketing strategies such as social media marketing could reap solid returns with minimal expenditures. Another benefit exists here. A lower-priced online marketing approach might deliver greater revenues than an expensive marketing campaign.
Make Saving Money a Priority
Small business owners positively must get expenses under control or serious problems may arise. A business requires cash reserves to help deal with the fickle, up-and-down nature of the market. Reducing expenses wherever unnecessary ones exist could help keep a business run smooth.
Dennis Hung has extensive experience in business and technology fields, and loves to write in his spare time to help others.