Business demands a lot of dedication, planning, strategising, ideating and effective implementation of ideas. If any of these ingredients go amiss, you can bid farewell to the lucrative income you hope to earn from your business. Hence, you must learn to economise business expenses if you wish to keep your business above the red line and want to cut good profits.
You can manage and balance your business budget just like you manage your house budget. You will have to cut some bills and increase investments in the right area.
In this article, we’ll talk about 40 ways in which you can cut costs to economise your business expenses. It’s time to boost that bottom line and send profits soaring.
Additional Reading: How To Get A Business Loan
Smart Promotions
Advertising
You don’t always have to plan a bold advertising strategy or something that will stand out like King Kong. The process of advertising your product can be weaved into your daily activities in small little ways. For example, on New Year’s Eve, you can send postcards and greetings to your customers along the year-end invoice and bill to save postage charges. You can save paper by doing all this online. If your business is what you’d call a retail outlet then optimise your sales or point-of-purchase counter. For one, you can load this area up with small, affordable goodies that people can pick on their way out. Second, you can keep flyers at the counter that talk about upcoming sales, promotions and other offers. You can even drop these flyers into the shopping bags of your customers.
If your business is what you’d call a retail outlet then optimise your sales or point-of-purchase counter. For one, you can load this area up with small, affordable goodies that people can pick on their way out. Second, you can keep flyers at the counter that talk about upcoming sales, promotions and other offers. You can even drop these flyers into the shopping bags of your customers.
Pair Up
We are sure you take afternoon breaks to have a quick chat with your neighbouring shop owner. Let’s make these conversations productive. Is the festive season around the corner or do you think the business is in need of a boost? No matter what the reasons are, promotions and sales need to be done time to time to give your business that much
Is the festive season around the corner or do you think the business is in need of a boost? No matter what the reasons are, promotions and sales need to be done at the right time to give your business that much-needed boost. But then these things have a certain cost. A good way to split the cost is to pair up with your business neighbour and plan joint promotions or sales activities. You can set up a table on the pavement and promote your products jointly. You can take this a notch higher by exchanging a list of each of your customers, distribution partners and suppliers. These are business friendly alliances.
Take Help
Most people shy away from asking for help due to fear of refusal. Well, it can’t get any worse than a refusal, so might as well ask. This point is especially important for start-ups and new entrepreneurs. Whether you are looking to gain new customers or finding an investor, always ask. Someone might be able to connect you with just the person you are looking for. Also, start a referral program. Ask your family and friends to spread the word around. Use the power of the Internet. This is how most businesses take-off.
Try Testimonials
Don’t you always read the comments section before trying out something new? Be it picking a fancy restaurant or purchasing a new phone from an online shopping website, comments always help. Same is true of your business. Customers might take your words of praise for your own business with a pinch of salt, but they will definitely agree with what their fellow customers say. They are, after all, sailing in the same boat.
So when you find a happy customer, the one who made a nice statement about your business, post it all over the place, Make sure all your other customers get to read it. Put it up on your website, at your store, a feedback book at the sales counter – any other way that works for you.
Power of TV
We all know the power of TV. Aren’t we all glued to it? We might hate advertisements, but then we don’t shy away from appreciating good ones. What we are asking is that you work on a TV advertisement. This can be expensive hence a cheaper solution is to create an ad that will be aired on your local cable TV. Local cable providers charge an affordable fee and will pass on your message to the right customer base.
Give Advice
Do you know, you can win a name for your business by doing something absolutely unrelated? Yes, there is a way. You need to get famous. Start speaking at the community halls or opt to write a weekly article for the local newspaper, magazine or anything else that will give you access to potential customers. Once you are known, you can start talking about your brand while you talk about, well, whatever you talk about. Moreover, making speeches and writing columns makes one appear smarter. Now, who doesn’t want to do business with a smart person, right?
Go Online
Start Searching
Just running a website is not enough. You need to make sure that it connects with your customers. How do you go about it? There will be many forums and blogs on your business sector. Read them and see what people are discussing and talking about. Now go back to your website and see if it answers those questions. The more convinced your customers are, the better for you.
Online Store
People might not go to a brick and mortar store, but they will definitely go to online stores. Now setting up an online store is not cheap. You might have to sell both your kidneys. So how do you start? If you are a new brand, start by selling your products on popular platforms like Amazon. These platforms will give the necessary lift to your brand. Once you have carved a name for yourself, you can start using your profits to make a kickass website. Something that’ll keep customers coming back.
Make Friends
Go back to the first point under the section about going to forums and blogs to know what is happening. Now going there is not enough. You need to start chatting. Since you are from the industry you’ll have a lot of good inputs. How about sharing these inputs and ideas on blogs and forums?
You might not think that this will help, but this indeed is a very smart business strategy. You can build a following and this following can soon become your customer base. This is a tried and tested method and many have benefitted from it. You can also use these forums to direct traffic to your website. Add a link to your website with your comments. People will come flooding (or clicking) in. Don’t make things too obvious. Just provide information. This alone will make people want to visit your website.
Let People Know
Once you have a website up and running how do you tell people that you are out there? One is word of mouth. The second is to start mentioning your link on your letterhead and all other kinds of official post, stationery.
If you have a store, you can start mentioning the details on the invoice, carry bags, and everything else you can think of. Press releases, a big yes! That’ll be the most effective method. Media houses could give you extra publicity if your press release is smartly done. Look at all channels, even the small ones, and use them to tell people about your website. Don’t forget hoardings and public vehicles. People read them.
Perfect Location
Approachable
It’s a good experience to find an office or a shop easily rather than getting lost in the nook and crannies of the complicated world, right? This applies to your business as well. Make sure the location of your office/shop is easy to find.
You can’t have an IT company running in a shopping complex. Likewise, you won’t open a thrift shop on the outskirts of your city in some tech park. Look at your product and think where people will go looking for it.
Keep Moving
If you are just starting out your business then you have to take measures to ensure that your business is nimble and pliable enough to meet changing demands. One way to keep yourself agile is by not investing in a permanent office. Rent out space. See how the place works for you. This will be cheaper than making one big investment in the initial phase of your business. Moreover, temporary spaces give you the opportunity to move out of your office space to a bigger one if the employee base grows. You can also use this strategy to establish your office at multiple locations and see which one works better.
Bonus Read: The Circle of Life: How Your Entrepreneurial Dreams Unknowingly Finance Others
Control Operating Costs
Skip The Printing
Who prints these days? Ok, maybe a little bit. But do you really need to print every bit of official paperwork? It’s the software age; everything is digitised. Try keeping your work process completely online. Instead of handing over an invoice, email it to your customers. Most people will make planes or boats out of pamphlets that are handed out. So, resort to email marketing more than pamphlets and flyers. If printing is an essential part of your business then look at cartridge costs. There are stores that offer recycled cartridges. They are cheaper and work decently.
Online Format
You might be in a business where you need your customers to fill forms. Feedback form, application form, anything. Now buying these forms from a supply store might cost big bucks, and on the other hand making them is time-consuming. After all, time is money. So what do you do? It’s the internet age. You can find all kinds of forms online. You can customise them for size, shape and colour and print them in bulk for an affordable price.
We Need Software
Whether your business is big or small, you need some kind of software to do the work for you. It can be as simple as Word doc, or a little more complicated like a budgeting tool. Either way, paying is not the way around.
There are many websites which offer these tools or their close cousins for free. You can also download software for free trial periods. Take advantage of these trial periods. Sometimes your requirement might only be for a few days.
Second-Hand Is Good
It’s human to want everything new in your new office. You want a smooth running new computer and a new mahogany table. Well, fair enough. But not everything needs to be new. You can get second-hand furniture, appliances, computers and other things or pick them up for dirt cheap prices at auction shops.
Keep an eye on the classifieds. You’ll know who is selling what and where. Also, there are websites and social media where people sell things they do not need anymore. Do not underestimate these platforms. You can get really amazing things; things you might not find if you go for ‘I want all things new’ shopping.
Employee Management
What’s The Need
Your employees are your biggest assets, your most important resource and strength. Without happy employees, your business will never take off. While it is important to keep your employees happy, you must also be wary of the cost that is needed to keep them happy. If you have a cyclical business where certain periods are busier than the others, then consider contract hiring.
Consider Experience
It is very important to have experienced people in your company, especially if the work involves legal issues or something tricky. But on the other hand, you might not need many years of experience for everything. In fact, fresh out of college kids might bring in new ideas. Give them a chance. You can give them a small stipend and they’ll be excited to learn the ropes. Often, freshers can be the most dedicated workers.
Commission Vs Salary
Employees need their benefits. They need salaries, bonus, insurance, fringe benefits, incentives etc. You can either opt for regular salary or go for commission based pay. This is cheaper in the pocket and employees also get paid according to their skills.
Stay Insured
Make More Friends
Throughout the article, we have spoken about making friends and how joint ventures can be very helpful to your business. We’ll say it again; making business friends can help you immensely during a crisis. Let’s say you are unable to run your business due to a technical glitch. What do you do? Instead of wasting days fixing it, partner up with a business neighbour and ask them if they’ll lease you their place during emergencies. This will ensure work continuity. The show has to go on.
Stay Insured
Sometimes a friend cannot be of much help. What you need is a good Insurance Plan. A good plan will save you a lot of money during a crisis. That’s when you need money the most. Look for insurance options, compare plans online and pick the one that suits your business the most. It’s good to identify hazards that are the biggest threat to your business. This will help you pick the right Insurance Plan.
Raise Your Deductible
When you take an Insurance Plan, you can raise the deductibles to reduce the premium amount. Now, what if you need to pay for these deductibles from your pocket? Well, in the long run, the money you save on premium will always be less than the money you pay in deductibles. Do the math and then take the plunge.
Bonus Read: Financial Planning Ideas To Make Your Money Grow
Tax Ninja
Be Honest With Budgeting
A business will cut a profit only if you keep an account of every small expense. When you are filing taxes, you might not need receipts for everything, but this does not mean that you don’t keep a record. Keeping a record of every penny will be a true record of accounts. You never know, these small pennies can bundle up to be a big sum. Once the numbers are in place you can effectively manage your taxes better.
Hire The Family
You might have members in your family who are in the zero tax bracket or are currently earning a little income. This is an opportunity to save tax. You can hire these individuals to do some job for you and then transfer some of your income in the name of these individuals and get some tax relief.
Know The Taxes
Paying your taxes is not enough. Taxation rules change each year. It’s imperative to stay abreast of these changes and see that others from the same industry are paying the same taxes as you. Also look out forgood to be aware of taxation rules in other states. It’s comfortable to be in your home city and state, but sometimes stepping out of these boundaries means amazing tax gains. Business means taking calculated risks.
Tax Sops
When the government asks you to pay tax, it also offers you tax benefits on some of your investments or expenditures. It’s important to know about these deductions. Corporate deductions are quite generous and amount to a handful of tax-free money. Speak with your CA in the very beginning of the financial year and see if you can maximise your returns. A penny saved is a penny earned.
Financial Management
Keep No Credit
We have been talking about cutting expenses and earning more to economise your business expenses, but in this section, we’ll look at the smaller bits. Let’s talk about your Credit Card. Do you do a lot of business transactions on your Credit Card and not pay the bill on time?
This means high-interest rate charges on your outstanding balance. Time to switch to a low-interest Credit Card. With this also get into the habit of clearing your dues on time. You could start scouting for new Credit Cards. Are there cards that come with zero annual fees or a great rewards program? If you find a card better than your existing card then make the switch.
Don’t Withdraw Using Credit Card
You might find yourself in need of cash. An immediate solution is withdrawing money using your Credit Card. This is all fine and nice, but you get charged for withdrawing cash from your Credit Card. If you really appreciate this facility then ask your bank to give you a card which features low cash withdrawal charges.
Earn Interest
On one hand, you must save interest by following good financial practices. On the other hand, you must follow better financial practices to earn interest. For example, if you want to make deposits or transfers to your account then do so early in the day. This wins you one entire day to earn interest on your deposits.
Form A JV
Remember we spoke about making friends. Find people operating the same business model as yours’. Now join hands with them and you can take bulk orders for a discount. Handing out discounts is one of the coolest ways to win new customers.
Do Your Own Delivery
Every business requires some form of delivery or supply. You might have people to run this errand for you. But if you are around the corner, perhaps you can do the delivery and pick up yourself. This will save you 100s or even 1000s. If you make it a habit, it’s good money saved. Add it to profits.
No Credits
A common business practice is to undertake business transactions on credit and then pay off the money at regular intervals. If any of your customers ask for credit, first do a background check. Don’t just start doing business on credit. You might find yourself in a lot of debt. The best way to trust a person is to take partial payment or by sending half the shipment. You can also take an insurance plan to save yourself from mishaps that might arise out of fraud.
Keep Policies In Place
Bargain
It is difficult to start a business relationship if you drive a hard bargain. But once you are on a roll and have built a good rapport with your business partners, you can try and bargain. Start with your insurance agent. Ask them
Start with your insurance agent. Ask them to tell you ways to reduce the premium. They will reveal some hidden tricks. Likewise, speak with your neighbouring store’s account manager and ask them what you can do to reduce overhead. A legal team comes for a price. If you have been soliciting the expertise of a certain lawyer for years, you can perhaps bargain for a lower fee. There is nothing to feel shy about asking for these favours. In exchange, you can give benefits such as discount coupons.
Set A Price
Other than having an in-house attorney, you might need to hire the services of a lawyer on a case to case basis. If such a thing happens you should chart out the terms and conditions carefully. Ask the lawyers about the main fees and also the miscellaneous costs. Then make sure you have it in writing. This will avoid conflict in the end. You don’t want to mess with a lawyer. Just like with a lawyer, set your terms and conditions on paper with all your business partners.
Learn A Skill
A good boss knows a little bit of everything. That’s a much-needed skill to run the show effectively. Knowing a little bit of everything also helps cut costs. Now, let’s say you want to draft a press release. Instead of hiring a PR expert you can do so yourself. There are many writing tools available online that’ll help you create an error free copy. Moreover, who can write better about your company than you? You can add unique details and facts to your press release, such as mentioning your story and how you went about starting a business.
Avoid The Court
Corporate lawsuits are in plenty. If you find yourself facing one then keep your ego aside and talk it out with the other party. Lawsuits are expensive and if you lose the battle then the charges are crushing. Might as well avoid this and speak with your lawyer to bring about a peaceful settlement.
The Last Stretch
Barter Trade
Barter trade is an effective method of clearing inventory and selling slow moving goods. Under this scheme, you can sign up with trade associations who will let you exchange your products for products from someone else. Imagine all the fee you’d otherwise pay to brokers and other middlemen. Not worth the cost and effort.
Timing
Timing is an important part of every business. You can reap amazing returns by being at the right place at the right time. This is true of business related transactions as well. Speak with some of your suppliers. Find out if making early payments will win you some discount. If yes, then why not. Likewise, when it comes to paying your bills—utilities, taxes, phone, Credit Card—pay them on the last due date. This way you don’t incur charges and the money stays with you for more time. You can pay your bills early, but the money would have earned your interest all that while. Think about it!
Find out if making early payments will win you some discount. If yes, then why not. Likewise, when it comes to paying your bills—utilities, taxes, phone, Credit Card—pay them on the last due date. This way you don’t incur charges and the money stays with you for more time. You can pay your bills early, but the money would have earned your interest all that while. Think about it!
Join Trade Associations
It’s very important to join trade associations if you want to know what’s happening in the industry. People of such associations often get the wind of things before the general public. You will know when the economy is likely to improve or fall back and you can prepare yourself for these changes well ahead of time. Moreover, trade associations are also a good place to find business connections. Then there are the fringe benefits. You can join a trade association for a certain fee and in exchange, you get discounts on Insurance, club membership, car hires and other fancy things. Imagine yourself playing golf with your business partners. Sounds fancy, doesn’t it? Well, it is fancy.
Moreover, trade associations are also a good place to find business connections. Then there are the fringe benefits. You can join a trade association for a certain fee and in exchange, you get discounts on Insurance, club membership, car hires and other fancy things. Imagine yourself playing golf with your business partners. Sounds fancy, doesn’t it? Well, it is fancy.
Get Bids
An important aspect of running a business is doing window shopping. Yes, window shopping. For a simple purchase, you scout shops and compare prices. Why not follow the same rule for business shopping. If you need to hire the services of a vendor then don’t go to the first shop that appears on google search. Do your research, find out the good ones and ask them to send you a quote. Do compare the prices and see who is offering what. The vendor who offers you the best deal for the lowest price is your person. Ink the deal with them. Also, stick to this practice for all your future needs.
Bonus Read: Small Business Loans For Women
Weren’t these tricks simple and helpful? Initially, they might not look much, but when you combine profits and savings from all of them under one umbrella, the quantum of your savings will surprise you.
A business is made up of big plans and ideas but to sustain it you need to pay attention to tiny details as well.
If you have run into a roadblock in your business and need a little something to help you jump start it, then look at a Personal Loan and Small-business Loan. When your business takes flight and you are ready to buy that house or car, we can again help you with a Home Loan or a Car Loan.