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Small business owners know that company finances vary over time. One month your product is booming and you’re getting new paying customers left and right. The next month, you’re not making money as fast as you’re spending it. In times of profit lull (especially when the economy is slow), you might need to cut certain expenses to increase the profitability of your small business.
How do you know which expenses to cut, though? Cutting the wrong ones can be detrimental to your business, as well as the happiness of your clients and employees. Here’s a guide about which expenses you can cut with the smallest repercussions.
1. Go paperless
Paper and ink are becoming outdated office supplies that you can cut out of your budget to save some money. More and more businesses are going completely paperless now that practically everything is available digitally. We know it sounds scary, but you can take baby steps to gradually stop using paper in the office and shave a little off of the company budget.
Get used to reading documents online instead of printing every time you need to read an article. Use online data storage instead of filing away all your paper documents in the office, wasting space and paper. You can even get clients to sign documents online. Also, think of all the other supplies you don’t have to buy when you aren’t using paper (pens, paper clips, staples, and file cabinets just to name a few)! If you must use the occasional paper product, print on both sides of the page and use refillable ink cartridges.
Not all jobs in the office need a full-time employee dedicated to them. To save money, you can cloudsource certain tasks to qualified professionals who work for themselves and take on various freelance projects.
Now, you’re spending a fraction of the cost that you would have with a traditional employee. Freelancers post their portfolios online publically, where you can negotiate the time period of the project and the specific work criteria, whether graphic design, content creation, or website construction. You don’t even have to spend money on the hiring process, which can often cost your company thousands of dollars!
3. Use interns
Outsourcing your work isn’t always the best course of action. For jobs that need to be completed in the office, an intern is a good choice. A contractor is another possibility for work that you can’t outsource, but they are often a pricey addition to your team.
To find interns in your area, call your local college or business trade school. Often, college students need an internship for course credit or will work for a monthly stipend. While you can pay interns less than a contractor or an outsourced employee, try to stay away from unpaid interns. Giving some form of payment will improve morality in the office, as well as work quality from your interns!
4. Ask for a discount
There might not be a sign on the door expressing discounts for small business owners, but many retailers do offer some sort of discount. Since there is not explicit advertising, you do have to take the initiative to ask if they offer any discounts for small business owners.
Smaller office items don’t always warrant a price cut, but if you are buying bulk or high-priced items many top retailers will throw a discount your way. Some places are even willing to give your business the wholesale price. Even if you get a small discount, every little bit counts towards your goal of cutting expenses.
5. Eliminate finance charges
Don’t waste any part of your precious budget on finance charges. Late payments on loans, credit card processing fees, and membership fees for business credit cards are all unnecessary expenses for your small business that can be avoided. Examine all of your membership and processing fees and ask yourself if they are really necessary. Is there another service that offers lower rates?
Paying your bills on time might seem like a no-brainer, but many businesses fall into the late payment trap and avoiding it can save your business a substantial amount of money each year. Online payment services can make this process easier for you, allowing you to set different alerts when certain bills are due.
In addition to these expenses you know you can cut back on, you should closely track all of your expenses for three months to find out what other spendings you can reduce. This exercise will help you see exactly where your company money is going and help you determine what is essential to the business and what is not. You know how you cut back on your personal finances when you stopped buying that hazelnut macchiato at Starbucks every morning? Find the coffee expense of your small business and get rid of it!
What expenses do you cut back on to help your business finances?