Reducing small business costs is something every business needs to do, no matter the type or the structure of the business. In today’s economic situation, it has become increasingly important for small businesses to find ways to reduce overall costs. This helps to boost the bottom line of the business even when sales are lower. In some cases, it can help to restructure a budget and work from the ground up by analyzing all areas where costs are too high. In other cases, you may know exactly where the problem is and may be looking for a specific solution.
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There are many places you can cut costs. The seven biggest areas where you can save, in general, are those listed here.
- Technology: The Good And Bad
- Consolidate Communications
- Reduce Business Credit Card Debt
- Analyze the Budget
- Market Your Business Smarter
- Manage Equipment Successfully
- Network with Business
Smart Use of Technology to Contain Costs
Technology is one of the biggest cost factors within a business. The costs of technology are often thought of as being too high. However, technology can actually be a tool for cost savings. You can save money by using technology to enhance the way you do business. In fact, today you can do some important things without spending a lot of money.
- Host teleconferences for your associates across the country or at multiple locations for virtually nothing. Avoid travel costs associated to such meetings.
- Use technology to speed up and manage payment services.
- You can use open source software to manage your business’s needs instead of purchasing high end products or using people to do simple tasks.
- You can even use remote desktop features, which allow you to employee independent contractors who work from home (thus cutting your labor costs significantly.)
These are just a few ways you can cut your small business costs with the use of technology. Don’t see it has a high expense but rather an opportunity to save.
Consolidate Communications to Reduce Your Costs
A simple way to save money is to consolidate your communications. You can do this in numerous ways, but one of the simplest is to get rid of your business’s landline. The use of VoIP or Voice over Internet Protocol is one of the best services for businesses today. The technology is far less expensive. You can make unlimited calls, even internationally for one smaller fee. This is because this service works over the Internet.
Evaluate if you really need that toll free number. Many big businesses today don’t have toll free numbers. On top of this, many people today call using their mobile phone and their minutes get charged anyway. So, they are not getting the benefits of a toll free number anyway. So, consider using a simple VOIP service for everything.
Apart from the VOIP phone, every small business owner will carry a cell phone with a certain plan. You can also use free text messaging instead of making a call.
Reduce Business Credit Card Debt
Credit card debt is one of the most expensive aspects of a business that gets less attention. However, carrying a balance month to month on credit cards is a sure way to raise costs. Interest rates and fees add up quickly, leading to serious problems.
Consolidate credit card debt into lower interest loans, or pay it off in full. Doing so could save your business thousands of dollars each year in interest, depending on the amount of debt you have.
Consider requesting a business line of credit from your bank. Typically these interests are lower than the credit card rates.
Keep Your Budget Focused to Keep Costs Under Check
Use your business plan to help prioritize goals for the next five years. Then, focus on creating an annual budget that focuses specifically on the goals. For example, if your business is working towards goal A, prioritize your budget for those sectors of the business that can contribute towards that goal. Other sectors of the business may face a budget reduction. Doing this can help you to achieve large goals quickly and keeps costs in line.
Market Your Business Smarter to Keep Marketing Costs Low
New marketing campaigns can be expensive. Even for a small business, though, marketing is critical to establishing the success of the organization. Therefore, focus specifically on marketing that costs less. Here are some ideas to consider.
- Cut costs by removing advertising no one sees anymore. Billboard ads, yellow page ads and similar types of advertisements are expensive and are easy for customers to miss.
- Market your business online through local ad placement services and listing services.
- Create a website to attract visitors to your business. Use social marketing methods to increase traffic to your site and to build your brand name.
- Communicate through email marketing rather than through snail mail. All you need is the customer’s email address and permission to keep them on the list.
- Market in unique ways. Gorilla marketing is a new type of technique that focuses on methods that get the attention of prospective clients.
Marketing can be a large part of any small business’s budget. Avoid cutting it out completely and instead focus on selecting marketing methods that add more value or a unique benefit instead.
Manage Equipment Effectively to Save Cost
Equipment can often be that thorn in a small business’s budget. If your business properly maintains the equipment, it will last longer. When you do need to buy new equipment, purchase refurbished equipment instead of buying new equipment. Doing this could save your business thousands of dollars in the lifetime of the product. It can also help you to update old technology or equipment that is costing you money, but in a less expensive manner.
Barter with Other Businesses to Save Cost
Yet another way to improve your business’s bottom line is by focusing on inexpensive ways to boost your business’s bottom line. For example, if you are a restaurant, offer free meals to the company that does the printing work for you. If you are a corporate office for an attorney, offer free legal advice (at a cap) to a local business that manages your IT needs. This type of bartering can actually boost your business’s bottom line by cutting out costs you can get for less or for free.
Finding a way to cut costs in your business is an individual process. Examine where your money is going first. Invest the time into this process so that you can learn where opportunities for savings are. It may be time to evaluate contracts with vendors. Look for new ways to do business, too, such as selling online. Doing this could help to improve your business’s budget, but it also can help you to consolidate and run your business more efficiently. Sometimes, having a new set of eyes on that budget can help. Take the time to investigate any area that may offer cost cutting opportunities.