As every single penny counts in an uncertain economy, even the smallest reduction in home-business expenses can have a huge impact on its profitability.
Contrary to popular belief, cutting business expenses and creating processes that reduce expenses, in the long run, doesn’t have to take a lot of effort or time. It’s all about making smart choices and using a few tried and tested tips to reduce home-business expenses.
A majority of small businesses fail during the first two years, and one of the biggest reasons is that they focus only on increasing sales, and not on reducing business expenses.
Interestingly, in a study that we did with 50+ small business owners, one of the questions we asked for, “What would be your advice to other businesses dealing with COVID-19 crisis?”, one of the top answers was to reduce business expenses.
So, we’re going a step ahead by giving you actionable tips to reduce your business expenses:
#1 Clear Your Debts Early
Like we know that there is a time-value of money, suppliers usually are happy to give you discounts for clearing their bills early.
They have to struggle to get cash from most of their buyers and to encourage early payment, they usually provide discounts to customers.
By paying them earlier, not only can you get discounts from them, but it would also help you in building great long term relations. They might even offer you even better deals in the future saving you even more money. And, it’s a great way to prevent business expenses from piling on in the first place.
#2 Use a Smart Thermostat (that’s right!)
This might seem like a strange suggestion but it’s one of those things that can make a big difference to your business expenses.
Air conditioning and heating are directly related to your comfort and can’t be compromised. Even a small change in them could bring about a huge loss in your productivity.
However, that doesn’t mean that you can’t do anything to save money there.
Nowadays, there are very efficient programmable and smart thermostats available in the market that can help you reduce expenses without compromising on your comfort or productivity.
These thermostats get the best possible climate control with the least possible usage.
Smart thermostat technology is such that once installed, it can learn your climate control preferences, gauge your building’s energy profile, and adjust itself automatically to maintain comfortable temperatures as efficiently as possible.
#3 Hire Interns
A summer internship is not a new concept and has been around for quite some time now. To strengthen their resume, graduating students like to utilize their summer vacations by working for a good company and gain professional experience.
Summer internships don’t require you to pay interns a huge salary but only a small stipend that can cover their expenses.
It’s a win-win situation where the students can get to gather some good working experience, and you can get sharp and bright minds working for you for much lesser pay than you would usually pay a full-time employee in their place.
Make sure you hire interns whenever possible to reduce business expenses and grow your business.
#4 Reduce Credit Card Debt
At the time of spending, swiping the business credit card to clear immediate bills might seem like a great idea. However, in the long run, it might not go in your favor.
The interest rates and additional fees that come along with your credit card transactions could just be slowing your growth.
To reduce business expenses, try to minimize the use of a credit card. It might not seem like the best way to reduce expenses immediately, but it definitely makes your long term business financially healthy.
#5 Review Plan Costs
Your company might have incurred monthly business expenses for essential services like cloud storage, telecommunications, bookkeeping, and so many more. These ongoing expenses could also be annual plans sometimes.
If you need whatever you’re paying for, it’s well and good. However, if you actually require less than the services of the plan you’ve purchased, you might be adding on to your company expenses unnecessarily.
Review your plans, every quarter, half-yearly, or at least once every year to determine how much of the plan you are actually using. If you think a cheaper plan could suffice your business needs, go for it.
On the other hand, if your existing plan is so cheap that you end up exceeding its limits, eventually paying much more than a more expensive plan, it could increase your expenses considerably.
If by paying more immediately you can get a higher capacity plan and reduce expenses by saving on the additional fees of exceeding the limit, take it.
#6 Buy Refurbished Equipment
Buying equipment amounts to huge business expenses and if you can save any money on that, it could help you reduce expenses a lot.
Many people believe that equipment should be bought brand new only for quality purposes but it’s not always true. Many times refurbished equipment can provide as good quality as a new one, but more a much lesser price.
The trick is to buy it from genuine and trusted sellers to avoid the risk of damaged equipment. Even the authentic brands of the equipment sell refurbished equipment for lesser prices, and it might be a great idea to buy it from them.
#7 Modernize Marketing
Paid advertising has always been an essential element for business. However, gone are the days when your business would be completely dependent on paid ads for its brand awareness and promotion.
Even though you can’t eliminate advertisement totally as it comes with its own benefits, you can definitely substitute a major chunk of it with digital marketing to save money.
By indulging in referral programs and influencer marketing you can increase the ROI of your marketing techniques considerably, as people usually trust the buying choices of a known or influential person.
If you need to reduce business expenses, modernizing marketing can take you a long way.
If your supplier can use a product or service that you provide, you might be able to work with each other in a way that saves money for both of you.
Before the invention of money, people used to survive on the basis of barter exchanges only. Now, even though the world economy depends on the currency system, the concept of non-monetary exchange is not completely obsolete.
In fact, due to the advancement in eCommerce, now barter is even easier with organizations like Tradebank. Just set up your account and start exchanging services that you need. Besides bartering, it also helps in growing your business network.
The nature and style of every business are different from another. For instance, a small retail business might hardly have any equipment other than a copier and it would be very difficult for it to reduce expenses with that approach.
What worked for one business might not work for another. That’s why we have included the most common tips for cutting business expenses. The above-mentioned tips and tricks can be used by most businesses to reduce expenses.
Even if your business can’t use all of them, it could definitely use most of them and reduce business expenses considerably. Just by reducing small-business utility costs, companies can save huge amounts of money which can fasten their growth.