7 Smart Ways for Small Businesses to Cut Costs
In a small business, every penny counts. Even the smallest cost-cutting strategies can positively affect a company’s profitability. Oftentimes, simple, common-sense changes can instantly boost your bottom line. Cost-reduction strategies can save you a lot of money in the long run. By reducing the average cost of one product or service, you’ll earn extra cash to get more done in your small business. Here are 7 smart ways for a small business to cut costs.
1. Cut Software License Costs
Software licenses can be a big expense for small businesses. If you can find an app that does basically the same thing as a software license, for less money, it is worth making a change. The savings go straight to the bottom line.
2. Negotiate Prices with Suppliers
If you make widgets, maybe a new supplier that sells the same raw material is willing to negotiate on the price to get your business. After you have success with one raw material, continue to look for replacements and negotiate on other materials, also. Improve your negotiation skills and learn helpful negotiation tips that can lead to an enormous pay-off.
3. Earn Money on Waste Products
To save money on production costs, look for ways to earn money on your production waste. For example, reuse the materials to create another product. Alternatively, sell your waste, like metal, cardboard, or paper to a third party to earn some cash. Although the local recycling center won’t pay you for your excess materials, a scrap metal and paper recycler will.
4. Find Cheaper Ways to Advertise
Review your marketing budget for your products and services, and consider cheaper alternatives to paid advertising. Harness the power of social media with posts that engage your audience and build brand recognition. Advertise less and network more. Participate in a local Chamber of Commerce or business networking organization to tell your brand story and build relationships with other business owners. Prospective customers are more likely to work with a business they are familiar with.
5. Subcontract Work to Other Businesses
More isn’t always better. It may seem counter-intuitive, but consider limiting the types of services and products you offer. Small business owners can narrow their focus to the products and services that yield the highest ROI. However, don’t turn customers away when they request a product or service you don’t offer. Instead, consider subcontracting the work to other businesses. As a result, you’ll earn revenue without taxing your staff or resources.
6. Use Virtual Technology
Virtual offices eliminate the need for physical space and the related expenses of a lease or mortgage, property insurance and taxes, utilities, and building maintenance. Virtual meetings, a cost-saving alternative to travel, now are the norm for many small businesses following the onset of the COVID-19 pandemic. Many organizations hold virtual meetings on video apps like Zoom or Google Meet. Going a step further with virtual technology, small businesses can save on ink, printer paper, and postage by using virtual documents instead of paper documents.
7. Implement Virtual Accounting & Bookkeeping
Migrating your bookkeeping to the cloud can save you thousands of dollars. We can show you how! But if you don’t have the time or passion for DIY accounting, consider outsourcing your business financial tasks to someone who does. As a virtual bookkeeper based in Green Bay, Wisconsin, Prosperity Bookkeeping provides a full range of professional bookkeeping services including:
- Data entry
- Document management
- Customer billing
- Vendor payment processing
- Employee payroll
- Business advisory & forecasting
- Software setup & discounts
Contact us today to learn more or to schedule a consultation.
About the Author: Once a mild-mannered reporter and editor, Joan Koehne took on the persona of her alter ego, Wonder Writer, to launch Writer to the Rescue, the content writing division of Packerland Websites. Wonder Writer is “saving the world one word at a time” with power-packed content marketing for digital and traditional media outlets.