According to the Small Business Administration, 50% of small businesses and start-ups fail within the first five years. While most business owners focus on improving production and sales to thrive and grow, studies indicate that cutting costs is a more practical approach for small business success.
Cutting costs may require you to make tough calls and trade-offs, but it does not have to be an overwhelming process. Neither should it alter your entire business structure or strategic plans. Many entrepreneurs have implemented these strategies to reduce overhead, streamline operations and processes and increase profit margins. You can also try them today.
Outsource Some Services
Sometimes, it makes economic sense to outsource services instead of hiring new employees or any role in the business. You can always utilize outsourced services, such as 1099-misc forms, for quick NEC reporting instead of hiring a new tax manager.
In some instances, you can use independent contractors to complete tasks. Freelancers often come as a more affordable alternative to employees because they do not demand benefits packages.
Manage Your Electricity Bills the Smart Way
Minimizing your power consumption can help you reduce monthly bills with more significant margins. Here are some ideas:
Turn off lights
Ensure that lights are off in rooms you are not using. You can also invest in motion sensors. These lights will turn off automatically when they do sense movements in offices for some time.
Unplug unused devices
Electronics and power devices that are always plugged in consume a lot of power without any returns. Ensure that any unused device is unplugged off power sources or turned off to save on electricity bills.
Similar to cutting your energy costs, reducing paper waste is a great cost-cutting opportunity that will save your small business money. This is also a sustainable project you can focus on to save the environment. Here are few tips to help reduce your office paper usage:
- Print and copy on both sides
- Reduce printing documents. Instead, save files to the cloud
- Shrink fonts on printed documents
- Reuse waste paper for notes
- Invest in secure electronic file exchange services
- Avoid direct mailing list, unless necessary
Telecommuting has offered a tremendous cost-cutting opportunity for many employers during the recent health. You can also employ this tactic to minimize costs and save money. Reduce costs on things like office supplies, space, and utilities by allowing employees to work remotely.
Telecommuting cuts costs in the following ways:
- Reduces utilities by lowering energy and water consumption
- Reduces space required to harbor employees, thus reducing rent money
- Reduces transport costs on the part of employees
- Reduces time wasted while commuting to and from work
- Improves productivity as employees are more motivated when working from the comfort of their homes
Many small businesses fail because owners don’t know how to increase profits while reducing operational costs. Accordingly, cost-cutting can be a bit tricky, especially for start-ups. However, if you want to succeed in a competitive business environment and failing global economy, you have to learn the best ways to manage your business finances.