Business insurance costs increase 10-20 percent every year. Airlines add costs to plane tickets. And suppliers increase costs regularly too. So your small business probably feels the crunch due to the annual increase in expenses. And you’ll need to figure out ways to reduce those costs.
How to Cut Costs in a Small Business
Take a look at these five things you can do today to save money. And boost your bottom line.
Negotiate with All Vendors
Don’t just leave money on the table. Avoid taking the first price that’s offered to you by a vendor. So go in with a goal in mind. And ask for it. If you never ask and just agree to pay the amount that is presented, you are potentially throwing away a large sum of cash. Don’t be afraid to politely negotiate and see what happens.
Lower Office Space Costs
While this depends on the commercial real estate costs where you reside, you might be able to relocate your small business to a more affordable location or negotiate with your current landlord for different (better) terms. If your office is at a new, potentially better location, you may also find that it will get your local business noticed.
If you do not need to run your business from a commercial location, consider operating your business from your house. Many businesses, from tech repair to plumbing and electrical services, are now running home-based and/or mobile businesses with ease.
If you don’t have to pay to rent a place, you will save on costs for office space, business taxes, insurance and utilities. Remember that before you convert to a home-based business, you’ll need to do some research about zoning and other bylaw issues to ensure you’re compliant.
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Cut Staffing Costs
Your staff matter; they’re the core of your small business. They’re also one of your largest expenses. If you notice that your business consistently has periods of time that are slow, consider some ways to decrease staffing costs. You can consider transitioning to hiring freelancers and contractors to save money on full time staff and insurance cost.
The good news is that when you hire an experienced freelancer or contractor, you can hire someone who is highly experienced in one area. This will allow you to hone in on specific areas you want to improve, such as ensuring you know what content to post on each social channel. When you hire people who are experts, it saves you money in the long run.
You can also communicate clearly and far in advance that bonuses are not a “right” but tied to both individual and company performance. Make sure your team sees the direct connection between the results that both they and the company and they generate are tied to the bonus they receive.
Reduce Vehicle Expenses
If you run a business that requires a vehicle, you’re familiar with how the costs associated with the vehicle can negatively affect your profits. Servicing costs and fuel, especially for large-sized vehicles such as vans, can be sky high.
One way to cut your vehicle expenses is to purchase a less expensive vehicle. When you choose to purchase a large truck or van, you will feel the cash crunch. However, if you’re happy to settle for a vehicle that is not brand new, you can save big. Keep your eyes peeled for used vehicles and see what you can find.
You should also work on reducing fuel consumption. It will save you money, and it’s good for the environment too. Hybrid and diesel vehicles are a greater investment on the front end but often pay off over time with maintenance and fuel savings.
Cut Supply Costs
If you’re running a business that makes a lot of wholesale supply purchases, it’s vital to get the best deal every time you make a purchase. A penny saved is a penny earned. This means you need to constantly monitor supply costs. Check for discounts and investigate other sources that can save you money. Some people are embarrassed to ask for discounts, but don’t be. Just remember there may be a time you need to reciprocate.
Small businesses are constantly being squeezed by increases in expenses. Now is the time to control your costs. Utilize these tips to decrease your business costs and increase your profit at the same time.
Related reading: Best Cost Cutting Ideas for Your Business