15 Ways Small Businesses (SMEs) Can Reduce Expenses
What business owner doesn’t want to cut expenses? But it is even more important for a young entrepreneur who has limited savings, limited access to capital and overall; less options.
Here are 15 ways you can use to reduce the costs of running your business;
#1. Put your accounting in the cloud. Using cloud-based accounting systems, let your service providers enter their “time sheets,” let your producers enter their “sold products,” and let cloud-based invoice systems quickly, promptly, and easily invoice your clients, collect your funds, and update your accounting system.
#2. Don’t hire what you don’t have to. Unless it’s something really outside of your skill set; don’t hire, just get it done. You’ll be amazed at what you can accomplish. Get organized and automate everything you can.
#3. Negotiate for everything; never take any cost at face value especially if you are buying more than 1! Customers always ask if they can receive better pricing on products, so why shouldn’t you be doing the same with your vendors?
#4. Its not how much money you make but its how much you keep. So overhead is key; it takes down more businesses that you can imagine. Even people working from home can still bankrupt themselves through ill conceived overspending.
#5. You don’t need to pay rent for an office if you never meet clients there; you don’t need to lease a Mercedes because it makes you feel successful, when a Nissan March will give you the transportation you need.
#6. The easiest thing to do to save money is to research supply sources even if you are a loyal customer to a supplier you have to see what the competitor has. Costs of various products rise every day but if someone has the same quality, same product for less, you should consider buying from them even if you have been loyal to another supplier.
#7. Keep as much work as you can in-house–ie do it yourself. By handling as many matters as you can, not only do you save yourself the money of paying someone else, but you’re also learning new skills and strengthening old ones.
#8. When you’re starting off a tech company, give your initial employees increased option plans as a substitute for salary. This helps you to reduce costs, and gives them more skin in the game, and as a result, their work product is often better
#9. Utilize tax planning when trying to retain more of your revenue and decrease costs. Tax planning is a year-round event if you want to minimize your business’s tax bill and maximize your net income. No matter what type of business you run, taxes will be one of your largest yearly expenses and proper planning is critical in building a successful business.
#10. Planning your daily routine, business trips, seminars etc carefully can help you cut down drastically on your travel expenses. Using webinars, Skype for video calls etc, can dramatically cut down on the need to travel over distances for business meetings, seminars etc, thus saving precious cost and time.
#11. Get college interns in the mix. You will be surprised how much you can get from students who simply are looking for some college credit and relevant work experience for their resumes. See if you can get in some local, hungry interns to do work that you normally have to pay for.
#12. In order to achieve savings on salaries, especially as a young business, it is essential to find people who are passionate, about your business and the product/service you provide. Passionate people will be willing to work for less and will still do a good job because they enjoy what they do.
#13. Build an adviser list. Whether these are alumni from your school, friends in relevant industries, fellow entrepreneurs, etc etc, think through this list first or better yet, reach out to them before spending big money on contractors and someone will probably be willing to help for free or make an introduction that reduces your cost.
#14. Take the time to find the right partners or employees. Don’t rush to hire the first people because you want to push your idea forward as soon as possible. Finding the right people will save time and money in the long run.
#15. Develop an expense review process (and use it). To do this properly, you need to have good bookkeeping. By properly classifying expenses, you can easily review many aspects of your overall expenses with a quick glance at an expense report or profit and loss.