22% of businesses make under $10,000. Does this sound like your business? You may receive a decent amount of sales. But when you fill out your profit and loss statements, do you realize your profits are shrinking?
If so, you’re probably spending more than what you should. Overhead costs can add up quickly and can leave a dent in your revenue.
There are surprising ways to save on these expenses so you can reap more profit.
Here are seven cost reduction strategies to save more money.
While it’s always nice to have a team of talented employees, paying their salary and benefits adds up.
This is why outsourcing is always an option when you need vital business functions but don’t have the finances to pay for an in-house employee.
Given, there are roles that you will need in-house. But if you can get away with outsourcing a specific task, you’ll save a lot of money. Many third-party agencies only charge a monthly or yearly fee, helping you save thousands of dollars.
Marketing is a great example. This is a specific skill that every business needs but may not have the means to achieve DIY.
2. Use Technology and Automation
Automation is taking over the business landscape, and for good reason.
Automation not only saves your business money but can also save you time. In addition, different automation and technological platforms help streamline your tasks and make management and delegation easier.
But how does this save you money? Let’s look at physical servers compared to the cloud.
Physical servers have hefty upfront costs, and they require maintenance. If they break down, you will have to pay for repairs or possibly a replacement server.
The cloud can save you a lot of money. A monthly fee includes maintenance and updates, so you’re not spending this extra money. And if you need more storage, just upgrade your plan.
Keep in mind, the tech you need depends on your business and the daily resources you need. But it’s helpful to examine the processes you’re using now and research cost-effective technological alternatives.
3.9 million Americans work from home. These days, remote workers aren’t limited to the occasional freelancer or contractor. More workers are telecommuting, whether they do so part-time or full-time.
There are situations when your business needs an office. But if you don’t, why rent an office at all? You’ll not only save thousands of dollars, but you’ll also be able to work from the comfort of your home (and in your pajamas!).
You’ll not only save money on an office rental. Think of the money you spend on gas, employee lunches, parking, and other costs that come with commuting. Your wallet will thank you!
4. Shop Around
There’s no reason to settle for the first tool or resource you come across. Shop around and see if you can find a necessity cheaper somewhere else.
Take a look at the simple resources you use daily. This includes the internet, a phone line, and equipment. There’s a chance you can find something high-quality for the fraction of the price you’re paying now.
You’ll also want to take advantage of services that offer a free consultation, discounts, or a free trial period.
Even unsuspecting costs, such as waste management, can add up. You can save more on waste management by taking a look at your current contracting, researching the competition, and even bidding.
5. Pay Invoices Early
Do you make it a point to pay all invoices on time? Take it a step further and pay early.
The services you outsource will appreciate your early pay and may start offering discounts, complimentary added services, lower-pricing negotiations, and may even further your business to one of their colleagues.
Sure, this may not be a lot. But the savings and perks can really add up.
What if paying an invoice early is out of the question? Then always pay on time.
Paying late can often result in penalties or late fees.
6. Reduce Energy
30% of the energy used in commercial buildings goes to waste. And these costs can seriously add up! Reduce energy to increase your savings.
How do you know what you’re wasting? Take a look at your daily office life. Do you set the thermostat too high or too low? Do you waste lots of paper and other products? What about lighting? Is your office well-insulated?
Reducing energy doesn’t only apply to wasted energy. Going green can help save money. From switching to solar power to simply cutting back on paper usage, there are many ways to benefit the environment and your business revenue.
7. Cancel Unused Services
Do you have many services that are auto-charged on your business accounts? If you don’t use them, why spend the money?
Take a look at your business bank account statements over the last six months. Make it a point to cancel any subscription or service you no longer use or need.
Keep in mind, you may need to take a look at any contracts before canceling. Some services charge a cancellation fee or only allow cancellation when your trial ends.
These auto-charged services aren’t limited to ones you don’t use. Like in the “shop around” advice, see if you can find the same high-quality service for cheaper.
Use These Cost Reduction Strategies and Grow Your Business Wealth
Do you wonder why your business can’t draw in a decent profit even though you’re beating sales goals?
From canceling unused services to investing in money-saving technology, there are many cost reduction strategies that will help give your business a revenue boost.
After you implement these strategies, you’ll be shocked how the little bit you save can go a long way.
Need more business advice? We offer articles that can help businesses of all sizes. Whether you need help growing a small business or choosing a new business credit card, you’ll find some useful content on our blog!