Companies are always so focused on revenues and maximizing their stock prices and profits that they often forget the other side of the equation — lowering business expenses — which can contribute immensely to their overall profits. If you own a business and are looking for ways to cut expenses, consider some of the following strategies.
Piggyback Some of Your Advertising
Find ways to include advertising in other mailings like invoices, according to Entrepreneur. This enables you to save on postage and generate sales with no additional costs. If you print a newsletter, include advertisements and coupons about new products in it. Another way to save on advertising costs is to use postcard decks. Companies that offer these services usually include dozens of other offers in their mailings. But the mailings go out to hundreds of thousands of customers. All you need are a fraction of the leads these cards generate to spur lots of traffic to your website or store. Local neighborhood ad magazines or circulars are another way to get your advertising message out to many local customers.
Use Independent Contractors
Use freelance copywriters, marketing research professionals and IT workers instead of hiring employees to oversee these functions. Search industry publications for these workers, or place online job ads to attract them. Using independent contractors enables you to avoid salaries and health-care expenses, which can really get expensive for small business owners who are just starting out. These independent professionals are also 1099 workers, meaning you don’t have to incur or deduct taxes from their paychecks. They report their own incomes and expenses.
Reduce Office Supply Costs
Stop buying all your office supplies at retail cost. Look for online wholesalers or vendors who sell pens, paperclips, legal pads, binders, copy paper, index tabs and staplers at reduced costs. Purchase more generic brands instead of the top sellers. Recycle your ink cartridges. Set a monthly budget for office supplies and don’t exceed that limit. Keep them locked in a cabinet and assign one person to dispense them. But make people sign for what they use so you can track everyone’s purchases. This alone can help deter those who take more supplies than they need.
Reduce Management Costs
Once employees learn their duties and responsibilities, reduce the number of hours in which they’re directly supervised. Kevin, Shawn T. and Edward J. Coyne of Harvard Business Review say you should be able to reduce supervisory hours by 10 percent each year if your employees’ duties remain unchanged during that timeframe. Moreover, reduce the number of managers who are performing duplicate functions to improve efficiency in your organization.
Cut Product Costs
If you manufacture your own products, study ways to obtain cheaper natural resources, such as paper, wood, plastics, gravel, corn, wheat and soy. If you purchase your products, compare the costs of various suppliers. Don’t be afraid to switch product sources if you can save money, especially if the new company will provide all the additional services you need and deliver on time.
Lower Financial Expenditures
Ask your bank if you can refinance the mortgage of your building if you own it. Consider leasing a building because it’s often the cheaper option. Lower your insurance expenses by ascertaining whether you’re overpaying or duplicating coverage in some areas. Similarly, compare other insurance companies to your own to determine if you can lower your premiums. If you plan to expand your business, conduct a thorough cost-benefit analysis and forecast before your do, according to American Express.
Purchase Used Equipment
Buy used fax machines, copiers and other high-end equipment. You should be able to save as much as 60 percent on used computers, office furniture and other equipment by buying them at national chains such as Aaron Rents & Sells, according to Entrepreneur. Also, attend auctions to purchase used or equipment or check online and newspaper ads.
If you start making a conscious effort to save on business expenses by using some of the aforementioned suggestions, you’ll be surprised how much you’ll reduce them. With that said, it may be difficult to just instantly address all the issues, you could utilize funding sources like VC capital or a small business loan. Running a small business is a living thing, staying on top of things needs to be consistently on your mind or you won’t notice things until it is too late.