For a small business, every dollar saved is a dollar earned. While being your own boss can be incredibly rewarding, it also gives you a great deal of responsibility to keep your business free from unnecessary debts. Yes, cutting expenses may not be as easy as it sounds; still, as a small business, you should always look out for cost-saving opportunities to help you set aside enough emergency funds to overcome any seasonal dry spells. Apart from the standard advice asking you to monitor your expenses and switch to using LED lighting to reduce your electricity bills, here are five practical actions you can take to reduce costs in your small business.
1. Embrace the cloud
If you've been following our blogs, you'll know that we never miss an opportunity to help business owners understand the benefits of using the cloud. If your business still relies on piles of paperwork and clunky spreadsheets to run smoothly from day to day, migrating to the cloud will not just save you money; it will also provide the flexibility needed to thrive in today's remote work environment. Going paperless may seem challenging at first, but you'll be able to cut back on physical storage space and maintenance costs, as well as keep your data safer in the long run.
If your business is not completely ready for this transition, you can start slow by taking these simple steps:
Send electronic invoices to your customers
Use free or trial versions of online business tools
Encourage customers to make digital payments
Store a backup of important documents in the cloud, and recycle hard copies daily
2. Limit your marketing expenses
As a small business, even the smallest steps towards reducing your extra expenses can significantly impact your profitability. Making smarter choices about how to promote your products or services can save you a whole lot of costs that are no doubt eating into your tight budget. While traditional marketing and online paid advertisements have their own charm, there are still plenty of options out there like social media and email marketing that can boost your online presence without you spending a cent. Here are five ways you can promote your small business online for free.
3. Reconsider your bulk purchases
Before you call us crazy for asking you to avoid bulk purchases, hear us out! Buying in bulk may be a great way to lower the cost per unit of your purchases and save money in the long run, but it may not be the smartest choice if you're looking to improve your cash flow. For example, imagine you run a departmental store and have purchased 10,000 units of your bestselling water sipper. While the number of units may be sufficient to meet the demand for the next few years, you'll never know how things will change over the course of time. If your customers' preferences change and they find the sipper's design outdated or if the government enforces any new rules on selling plastic products, your business could suffer major consequences. So before you sign a killer deal agreeing on a bulk purchase, consider whether the large sum of money you spend on that stock now will end up sitting idle in your warehouse later. Some of those funds may be better spent investing in software or hiring additional staff.
4. Buy used office equipment
If you're truly committed to minimising expenses at every possible level, it is a great idea to consider buying second-hand or pre-owned goods. Whether it's office desks, chairs, laptops, or printers, buying used products can save you a good deal of money. In fact, according to Gumtree's 2020 Second Hand Economy Report, 43% of second-hand shoppers in Australia say they saved nearly half the price they would have paid for new items. So the next time you have to replace a piece of outdated or faulty office equipment, look for classified ads in your local newspaper or use websites like Gumtree and eBay to identify the right vendors and negotiate a good deal.
5. Outsource work
Once your small business starts to grow, you’ll need extra hands to manage your rising workload. However, if your business isn't ready to commit to the recurring expenses and salary payouts for additional employees, hiring freelancers might be a more cost-effective solution. From handling your social media accounts to managing your emails, there are plenty of websites like Fiverr and Upwork that can help you find the right talent to fill certain roles for a short term. But keep in mind, when it comes to confidential tasks that deal with a client's personal information, it's always best to depend on your in-house team to get the job done.
The way you manage your finances can have a huge role in your business' overall success, and it's crucial to ensure that the steps you take to cut corners don't end up affecting the quality of your service. We hope this post encourages you to be thoughtful about your expenses. Do you have any other cost-saving tips you'd like us to add? Let us know in the comments below.