Small business owners like us need to make sure we run tight ships. Spending less can help us weather slowing cash flow; cutting expenses can help realize more profit. The following are my tips for saving money – I suggest sharing them with key members of your team. It’s not just enough for the owner to be aware of spending; others on the team closer to day-to-day expenditures may also spot money-saving opportunities.
1. Examine Your Bills.
If it’s been a while since you looked at how much you’re spending on phone, utilities, Internet service, overnight delivery costs and similar expenses, it could be worth your while to look now. As technology brings new options to small businesses, such as VOIP, you can cut your costs by finding more affordable services.
- Do you really need landlines? If you’re a “solopreneur” or have just a handful of employees who are always on the go, then mobile phones along with Google Talk and/or Skype might be all you need to run your business
- When was the last time you compared minute plans for your mobile phones? Do it now.
- Scour your credit card statements for overlooked recurring charges. You may find, like we did, that we were paying almost $200 a month for a rarely used webinar/online meeting subscription. And for the few times we needed one, free alternatives like ooVoo or recorded Skype chats served our purpose.
2. Examine Your Insurance.
You may find cost savings if you reassess your small business insurance coverage. For example, is your coverage still right for your business needs, or could you reduce some of it to save money? By raising your deductible, you can lower the monthly premium. Just be sure you have enough cash in reserve to cover the higher deductible.
If you’re a member of a professional organization, like a Chamber of Commerce, you may be able to get lower rates through this channel.
Comparison shop! Schedule a meeting or call with an insurance agent to discuss options. A multi-line agent can help you sort through different carrier options. Ask about bundling, too— sometimes you get a discount for purchasing multiple insurance coverages through the same carrier.
3. Pay Early.
Whether it’s trash bags or copier paper, buy in as large a quantity and as much in advance as you can … if it saves you money. Planning your office supplies by shopping ahead of time can help you take advantage of sales and warehouse shopping deals. For marketing collateral and signage for trade shows and events, finish them early to avoid rush printing and delivery charges.
4. End or Lower Your Lease.
Real estate can be a sizable fixed cost. If you are strapped for cash, talk to your landlord about lowering rent, even temporarily, or moving to smaller space in the same building. Chances are, he can’t afford to lose a tenant, and may be willing to negotiate.
Depending on the structure of your company, you might not even need an office—especially if yours is a startup and your staff can work anywhere. Remove the constricts of requiring your workers to physically be in your office, and you’ll save on rent, utilities, equipment … and your employees will save on gas for commuting. The bonus is that your workers will likely be happier.
If you or employees need to get out of the house occasionally or working from a coffee shop just doesn’t cut it, there are co-working spaces or virtual offices all over the country. They give you access to the Internet, copy machine, conference rooms and even receptionist services, all for a low rate.
5. Take it To the Cloud.
If you have in-house servers, you know they can be costly to maintain and update. Not to mention the fact that if you have a sudden surge in traffic or activity, it can be difficult to ramp up to accommodate the influx, short of buying more servers. Just like with freelancers, cloud servers and storage let you pay for what you need, and they allow you to ramp up or down as your business needs change.
Cloud software eliminates the need to have staff update software, install patches and keep it operating—this can reduce staff costs. You also can eliminate hefty up-front license fees, replacing them with lower monthly costs. Just be sure to tally up a year’s worth of monthly costs, to make sure you truly are saving money. A comparison of annual or multi-year costs, fully loaded with staff costs, lets you compare apples to apples.
6. Hire Freelancers.
If your business is growing, but you don’t feel certain enough to hire full time staff, consider a freelancer, contractor or third party agency. This way, you only pay for the work you need done, and you don’t have the headache of benefits, raises and sick days. And if you need to ratchet costs down again, you can easily do that without the emotional trauma of laying off employees.
Hiring freelancers works particularly well for professional roles: software developers, Web designers, copywriters, PR professionals, consultants, administrative professionals and the like. You will typically pay a higher hourly rate for a contractor versus an employee. But in exchange you may get a more experienced worker who accomplishes more in an hour’s time and needs less daily supervision. Remember, there’s a cost for management and training time, too.
7. Buy in Bulk.
Some business service providers offer a 10 percent or greater discount if you pay for six months or more in advance. And vendors for inventory and supplies may offer trade terms, where they allow you to pay early in exchange for a discount. If you are buying in large amounts, that trade discount for early payment effectively slashes your costs. Typically you get a discount of 1 percent or 2 percent for paying early, if offered. Or roll your own trade terms—consider paying via a charge card that gives you a discount or cash rebate for early payment.
8. Save on Client Gifts.
If you give your clients (or employees) gifts at Christmas or other holidays, take advantage of daily deals and coupons to save on flowers, wine and corporate gifts. If you have a credit or charge card that offers rewards, use the points. You still get the karma for being a gift giver, but your bank account won’t take as big of a hit.
9. Use Free Business Resources.
Looking for business advice? Before you pay that consultant $200 an hour, look to local free resources for tips on saving money and more. Organizations like ASBDC centers, SBA and SCORE offer free business counseling and mentoring and can help you with everything from creating a business plan to advertising in your community.
10. Find Free Software.
Why pay for software if there’s a perfectly good free or version available? Google Drive, 37Signals and MailChimp are all examples of platforms that deliver free solutions (some offer paid versions for higher usage) for word processing, email marketing and project management.
Download.com also has a plethora of free downloads in categories like security, development and networking, so check there first before forking over cash unnecessarily.
Bonus Tip For Saving Money.
Here’s a final bonus tip: when cutting expenses, make sure you don’t strangle growth. Cut where it won’t affect your ability to make new sales or keep existing customers satisfied.