Business owners want to make money, but far too many spend money unnecessarily. In fact, according to Business Insider, 82% of all businesses fail because of cash flow problems.
The easiest way you can reduce business costs is by recognizing the necessary from the unnecessary. If you’re paying thousands to a social media expert but have the highest and most positive social media presence then that’s a market differentiator. However, if you’re paying tons to an automated service line then you’re looking at a place to start when cutting costs.
Reducing costs and creating healthy processes don’t need to take up time or your energy, instead, it’s about making smart choices when reducing business costs. We highlight six easy ways you can reduce business expenses below.
With technological advancements happening almost on a daily basis, there are numerous options available that can reduce business expenses. For example, online payment services such as PayPal or Venmo ensure you receive payments on time and don’t cost you too much either.
Google Docs or Trello are free tools that can help to organize and centralize company documents and collaborate better so you can avoid a massive paper trail and endless physical meetings.
Not to mention, there are also multiple apps in the market that are built for employee management. The best value-for-money solution is Connecteam, an employee management app that offers a true all-in-one solution and was designed especially for the deskless workforce – plus, it includes a free for life plan!
Not to mention, technology helps keep your employees at the top of their game. Eliminate the tedious logistical work and help ensure your team is working on what’s genuinely needed. The following are just a few advantages of using an employee management app, like Connecteam for example:
- Streamline communication: With an employee management app, you can easily minimize the need for face-to-face meetings and unnecessary phone calls. Easily send messages in real-time to a single person or a filtered group, such as announcements, sales updates, welcome new hires, celebrate birthdays, and more. Enable social functions, likes, and comments, to help boost employee engagement.
- Streamline operations: Move from pen and paper to a digital time clock, job scheduling, and digital forms and checklists – this is a total game-changer for your business.
- Streamline training: Your employees need to be pros as quickly as possible and you definitely don’t want to lose hours on training, you want your new hires to hit the ground running. With training material available on their mobile phone, employees can learn at their own pace and always have access to courses to build their professional skills. Create quizzes to ensure your employees understand the content covered.
Ditch the paper
You may think that the price of paper, ink, mailing supplies, and postage is rather minimal. However, these amounts can add to extraordinary numbers if you aren’t careful. Device Magic did the math and here’s what they found:
It’s a much wiser course of action to go paperless (unless printing is absolutely necessary), then you can easily reduce these recurring business costs. A digital invoice and bill payment system allows you to file all paperwork on your computer which leads to so many benefits including:
- Improved compliance
- Save an average of 10 hours every week on admin by eliminating data entry
- Higher productivity with paperless workflows
- Time saved from data entry equals average annual savings between $10,000 – $15,000.
Make sure the solution you choose is available on mobile (like Jotform and Connecteam) as well so you can access it anywhere and at any time. This will save you and your employees a lot of time as well and you can avoid the hassle of lugging around binders full of paper forms.
Modern marketing strategies are golden
While you shouldn’t completely stop paid advertising, there are free or cheaper alternatives available that can help reduce business expenses.
- Network: Manifest reported that “People trust what they see on social media, and as a result, 67% have made a purchase after seeing an advertisement on social media.” Therefore, engage with your audience online, talk with them, and build up connections to gain more sales while boosting your online reputation.
- Work in-house: If you or a member of your team can take on a little more responsibility then this should be the default instead of paying a freelancer.
- Platform options: Have a strong presence on social media and stick to the channels that work best for you: Facebook, Snapchat, LinkedIn, Instagram, Twitter, Pinterest, and so on. However, ensure you have a goal set and a strategy in place as posting randomly will get you nowhere.
- Referral program: Have a referral program in place as you build up your customer email list. Recommendations from current customers can easily and quickly lead to sales.
- Get reviews: Reach out to current customers to write a review about your company, product, customer service team, etc. They can write their glowing recommendation on your website, social media channel(s), or review channels like Reddit.
Manage time effectively
Time is money. If you aren’t working productively then you’re only wasting time and bleeding money. Try the following to keep down business costs that come with wasted time:
- Minimize distractions by using apps like Focus Booster, Todoist, or Rescue Time. These apps help you focus and stay on point so important tasks don’t get forgotten.
- Connecteam and Toggl track hours worked (for you and your team), the time work activities or projects took, and highlighted billable hours.
- Make it clear how long a task should take and offer incentives if the time frame is met or takes even less time.
- Run meetings on a predetermined block of time to ensure everyone is on time, stick to the agenda, and wrap up the meeting in the allotted time.
- Avoid unnecessary meetings by asking your team to send a meeting agenda highlighting what needs to be discussed. If most of the points raised can be answered in an email, then a meeting is unnecessary. In addition, you can come prepared to the meeting with answers instead of needing a follow-up meeting.
Consider your location
If your business doesn’t require a physical location then you need to don’t buy or rent one. Instead, options like working from home, shared workplaces, or switch meeting at an employee’s house every month.
However, if your business does need a physical location then keep this in mind: analyze how much physical space you have so you don’t take on more than needed and consolidate different functions like using a space for dual purposes.
Reducing business costs also relies on budgeting wisely. You won’t be able to make smart financial decisions if you don’t have a clear idea of how much money is coming in and out every month. Implementing a budget provides you with a daily view of business expenses. With BudgetBakers, you can see spending in real-time, spot spending habits, set achievable goals, and more.
Additionally, review your insurance policies and financial accounts to help reduce business expenses:
- Compare insurance providers for the best deal and ask your current provider to match that rate.
- Consolidate insurance policies or bank accounts when possible.
- Evaluate insurance policies to make sure you aren’t being over-insured or have duplicating coverage.
- Avoid unnecessary debt with a thorough cost-benefit analysis and future forecasting.
- Consider opportunity costs and the effects that occur with debt payments on cash flow. If you have excess debt, the company rating, interest rates, and borrowing can all be affected in the future.
Small businesses are always squeezed by increases in expenses, that’s why controlling costs is so important. The six tips we highlighted above are a great starting point in reducing business costs and improving your bottom line.
Interesting related article: “What does cost mean?”