New Year, New Entrepreneur: 5 Painless Ways to Reduce Expenses
For small and mid-sized businesses, even relatively minor cuts in expenses can add up to big savings and improved performance over time. You can use those extra precious dollars to reinvest in your company, and fund activities that drive more growth. But where might you be leaving money on the table? Much like personal budgets, business budgets can have hidden areas of costs that merit a deeper look and often lead to savings. Here are five ways to save on your business expenses without significantly impacting your people, operations or momentum.
1. Stay organized on your books. This seems straightforward, and yet talk to any CPA or bookkeeper and they’ll tell you that they spend a good amount of billable time simply organizing clients’ finances. Keep your books in order. This includes categorizing your expenses, making sure you’re being billed accurately, and looking for areas of overlap, which make for easy cuts. The results of these efforts are valuable: you’ll save CPA time, and find potential savings within your everyday expenses.
2. Review your vendor costs. Regardless of your business and industry, your company is likely paying multiple vendors for services such as office cleaning, equipment maintenance, creative work or legal guidance. Dig into which vendors are earning the most of your company’s dollars and make sure that you’re paying a fair price for your market. Also if you do have a contract, review whether you’re making the most of what you’re paying for – if not, eliminate contracts for services that you’re not using or consolidate those services into one vendor for a better, overall price.
3. Look at your tech spend. Take an inventory of the subscription software applications that the company is purchasing annually or monthly. Is staff using all of them? Do some of them do the same thing? Are you paying for seats or users that you no longer need? Subscriptions for such applications can add up. Make sure that the ones you’re regularly paying for are valuable enough to justify the cost.
4. Save on energy costs. This is another passive savings opportunity that doesn’t catch the attention of many small businesses. An action as simple as powering down equipment before your staff heads home for the night can significantly reduce your electricity usage and ultimately expense. This goes for any large equipment your company relies on, as well as lights, computers, and other small machines. Also consider replacing older equipment, such as scanners and printers with newer, efficient models.
5. Pay attention to insurance costs. For many SMBs, employee health insurance – not to mention liability, cyber and other products – is one of the biggest expenses after payroll. Evaluate your contracts at least once a year and invest a few hours in shopping for better rates. Also investigate bundling your products together if you don’t already. Doing so can sometimes lead to better deals with your insurance carrier.
Cutting back on expenses is the easiest way to boost your profitability. Dedicate some time to finding some easy cuts – and your bottom line will reap the rewards.
Looking for more ways to streamline your business? Explore areas where SaaS can drive operational efficiencies.