16 Nov 5 Ways to Save Money in your Business
5 Ways to Save Money in your Business
Looking for simple ways to cut costs? These tips will help you make a noticeable difference to your net profit. Remember there are only two ways to increase your profit, increase sales, or reduce costs.
1. Reduce staff costs
Having someone to help deal with routine tasks can greatly improve productivity. However, that hired help is often too expensive for small business owners. A lot of small business owners want to take on staff, that’s how we grow our business, right? However, most business owners take on staff too early, normally before they can really afford to. Remember, it’s not just the basic salary, you have to add in employers national insurance, pensions, pay for holidays, sick days, and maternity cover. What may have seemed a reasonable amount to pay for additional help, can quite quickly cost way more than you can afford.
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2. Think Niche
Small business owners are often advised to trim down their offerings to a niche market. You can save money by applying that same thinking to how you do business.
For instance, subcontracting can allow a service-based business owner to keep a narrow focus on the work they do, while attracting more customers. Taking on more work and paying someone to do it at a lower rate than you charge your clients will increase capacity and your bottom line – while maintaining your focus on what you do best.
3. Network more
Forget expensive print ads and direct mail campaigns. You can save a ton of money getting the word out about your business by connecting directly with your target market:
- Co-host an event with a business owner whose customers will be interested in what you do.
- Connect with your local Chamber of Commerce.
- Attend business networking referral events.
- Run a contest on social media.
- Sponsor a community fundraiser.
Networking at trade shows and industry events is another great way to meet potential partners and customers, without breaking the bank on costly advertising fees.
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4. Embrace co-operation
Often businesses buy in bulk to save money. Unfortunately, purchasing in volume can backfire if you’re struggling to maintain positive cash flow, and the cheap supplies you bought never get used.
A better strategy is to only buy what you need and to share costs with other small business owners. Forming strategic partnerships with businesses can lead to lucrative customers whilst collectively saving everyone some cash.
5. Save Time with Technology
If you haven’t yet made the leap, adopt cloud-based software to improve operational efficiency. Try free collaboration tools like Google Drive – also a great way to cut down on the cost of paper. Use virtual meeting technology to save a small fortune on travel costs when connecting with clients in different time zones. And do a free trial of accounting software to see how automating routine tasks like invoicing and payroll can improve accuracy and free up hours from your schedule. At Crunchers we are Xero Certified Edinburgh Accountants, and would be happy to give you a free demonstration on how to take your business to the next level.
Review your business expenses on a regular basis to track rising costs and to find more ways to reduce unnecessary spending.
A few final – and costly – pitfalls for busy small business owners to avoid:
- Always pay vendors and lenders on time to avoid late fees, interest and a poor credit rating.
- Shop around for the best deals on everything from software and financial services to office supplies and inventory. Remember you don’t have to buy new, if you can get soemthing cheaper used, then why not save some money. Also remember to ask for a discount on those items you are buying new.
- Hold off on renting space for as long as possible. Encourage staff to work remotely, meet clients in coffee shops and remember: home office space is an eligible tax write off.
What will you do differently to start cutting costs for your small business today?
Crunchers – Accountants Edinburgh
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