A successful business makes more money than it spends. Period. That’s the secret to keeping your business growing. There are many ways to get your small business to report increased profits. Yet the easiest place to begin is by reviewing your corporate expenses. When was the last time you did that? How long has it been since you really considered how business costs are impacting your profits?
Once you dive into your operational costs, you may be surprised by how much money could be saved. When looking at fixed costs like insurance, make sure you have the right balance of cover and cost with your public liability insurance. Use this extra free time to review your current public liability plan or comparison shop online for an alternative policy. You can get started by checking out BizCover for online quotes, coverage benefits, and other assistance.
For more ideas on how you could save your small business thousands of dollars, check out our list below.
1. Supplies and equipment
There’s a huge opportunity to save money by reviewing your current inventory. You’ll want to check out all your product, equipment, and supply costs.
Ask yourself these questions:
- Have you investigated getting the same materials at a reduced cost from a different vendor?
- Can you negotiate a better price from your current supplier?
- Will buying in bulk reduce your per-unit costs?
- Are there any wasted business expenses that you can remove from your budget completely?
- Are your employees wasting any materials? Is there a way to work more efficiently?
- Will my material suppliers give me a discount if I pay invoices early?
- Are you paying for a lot of equipment breakdowns? If you haven’t been keeping track of your business expenses, now is the time to begin doing so. Keeping a watchful eye on the money you’re paying out is the best way to improve your operational budget.
2. Ongoing memberships and subscriptions
Do you pay nominal monthly fees to be part of a professional organization or an online registry? Did you recently notice a recurring software fee for a product you no longer use? Do you have at least one member that you keep meaning to cancel but always forget to follow through? What auto-charges are showing up on your business credit card or bank account? Have you considered whether these ongoing maintenance fees are helping your business or hurting it?
You might be surprised that some of your monthly fees can be reduced or even canceled. Why keep paying for anything that’s not moving your business forward? By eliminating these unnecessary charges, your company could save hundreds of dollars over a one-year period.
3. Business Marketing
Your business may have ongoing advertisements and regular marketing campaigns. However, it’s important that you assess the value and impact of these marketing programs. Are they worth the money you’re spending?
Keep in mind, there are lots of free or low-cost advertising opportunities via online marketing. You can create quite a following by utilizing your social media platforms, email marketing, and your business website.
Look over your advertising plans for the year and be sure you’re getting a return on your investment. If not, then it’s time to come up with an alternative, more affordable marketing program.
4. Rent or Mortgage
Besides payroll expenses, rent, and utilities for your workspace are probably your company’s biggest recurring costs. If you purchased a commercial space outright, that means a regular mortgage payment and property taxes are your responsibility. No matter the size of your company’s office/warehouse/storefront or its location, you’ll most likely pay a flat rate of several hundred to several thousand dollars each month.
To help offset costs that fall under this category consider the following:
- you could sublease some of your space to another organization, this would lessen your monthly rental (mortgage) charges
- or if you’re renting an office space then maybe it’s time for your business to relocate to a less pricey part of town.
- downsizing is also a way to possibly reduce your rent
Are you tired of seeing a large utility bill every month? Well, cutting down on electricity, water, and other services is simple. You must look for ways to reduce your usage. For instance, unplug electronics when they aren’t being used or replace traditional light bulbs with LED light bulbs. Research the equipment you use to determine if there is more efficient machinery available. If so, you’ll want to crunch some numbers to find out if investing in the more efficient equipment would be worthwhile. You’ll be surprised how small changes can make a big difference in your utility expenses.
Review Expenses Every 3 Months
Business owners, like yourself, regularly review each of these operational costs. Typically, you should be doing so every 3 to 6 months. It could easily save you thousands of dollars (or more) annually. If your business struggles to make a profit or you have any cash flow issues, reviewing business expenses can help get your company back on track.