Every business looks for ways to improve their bottom line, that don’t focus on increasing revenue. This is because revenue is so dependent on other factors at play. Cutting expenses can be scary for small businesses, as they worry about losing their identity and cutting the wrong things. However, below are several ways to cut expenses in your small business without affecting your brand or product.
When trying to cut expenses in your small business, you should first evaluate where the money is going. Once you know where your money is going you can renegotiate contracts or reduce services.
Small business insurance rates tend to fluctuate year-to-year based on industry performance and trends. This combined with automatic renewals means you may be paying more for your insurance than you need to. Take the time to review your insurance policy annually, so you can adjust it accordingly. Consider raising your deductibles, and taking previous claims into account can help you to obtain a lower-cost policy. You may also be able to bundle policies together, such as your business and car insurance.
Payroll is a huge expense, and you may be losing money by mismanaging your staff. Now, this doesn’t mean you need to fire someone to save money and cut costs. Instead, you should review the work of your staff, the tasks they are doing, and what their strengths are. By restructuring job roles, your staff can be more productive, which allows you to prolong hiring the next employee. Some staff may also want to change their hours or reduce their work week, having these discussions can allow you to save on staffing costs.
If you run a retail store, ensure you use sales forecasting to help you create an employee schedule that works well. After all, overstaffing even one day a week can add up fast. Finally, pay attention to any new wage laws and increases so you can budget and plan for them.
Using AI technology can help your business with basic tasks and customer service. Consider adding a chatbot to your website to offer 24/7 customer service. This allows you to utilize your staff in a more productive way while still providing great service. AI technology can also help with bookkeeping, inventory management, and data analytics. As technology continues to evolve, AI services continue to improve and can help your business with even more repetitive tasks.
Office supplies account for more of your operating costs than you likely think. Having high-quality paper and expensive pens is nice, but it isn’t necessary, especially for office-only items. Consider keeping nicer paper for client-only items, and having a cheaper option for printing reports, inventory tracking, leave forms, and anything that will be kept in the office. This one change can greatly reduce your supply expenses immediately. However, to save even more money consider buying basic ballpoint pens and reducing the use of items like post-its.
Finally, even though you may have an office products supplier, you should shop around. There may be other companies offering a better deal or even a sale on Amazon for the products you need.
Advertising is a huge cost for small businesses, however, social media makes it possible to lower your advertising costs. Online and social media marketing is very affordable and allows you to directly target your audience. Nowadays, customers can even purchase products directly from social media as they scroll. In addition to purchasing advertising on these platforms, posting regularly can also help drive sales. Develop a social media marketing strategy that focuses on content creation. The more followers you have engaging with your content, the higher your sales and conversions will be.
To cut expenses in your small business you first need to know where your money is going. Conduct a full financial audit of your company and look at what services you can reduce or remove. There may even be some payments for software you no longer use or other reoccurring subscriptions that are unnecessary in your current business plan. By making small changes to your business operations, you can save money and allocate it elsewhere.