4 Cost-Cutting Ideas to Help Your Business Boost Profits

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Small businesses are aplenty in the US. According to the 2018 Small Business Profile from the Small Business Administration, the United States has 30.2 million small businesses, which comprise 99.9 percent of all the businesses in the country.

Although startups and mom-and-pop shops are abundant, they don’t last long. An infographic published in Business Insider revealed one-fifth of all small businesses don’t make it past the first year. One of the top reasons behind the closure is owners run out of cash.

Many entrepreneurs put their time and energy on increasing sales, but they need to realize that decreasing company expenses is equally important. By controlling business expenses, they can achieve or maintain profitability.

If you need help managing company expenses, keep these cost-cutting suggestions in mind:

Review and Track What You Spend

Take a good look at your business expenses and identify the costs you can eliminate with minimal to no consequences. An example is buying new equipment, from printers and copiers to company cars and delivery vans. Instead of going for new items, go with used but well maintained office technology and vehicles.

You also need to be diligent in tracking the expenses of your business. List every single expense-related transactions in a spreadsheet. This activity shouldn’t be an afterthought, as you need to determine how much your company is spending when conducting financial planning and analysis.

Minimize Paper Use

business meetingReducing paper waste isn’t just good for the environment. It’s also instrumental in lowering your overhead costs. You have plenty of options to decrease paper consumption. A few to consider are:

  • Implementing a Print Policy – Set ground rules for using the office printer by enumerating the documents that’s OK to print.
  • Enforcing a Duplex Printing Rule – Require your employees to use both sides of the paper when printing important documents.
  • Storing Vital Documents Electronically – Rather than print “paper backups,” migrate electronic documents on the cloud or a reliable document management system.

Explore Telecommuting Opportunities

Figure out if a work-from-home option for your employees is feasible for your business. By keeping things virtual, you can avoid rental costs, which can get expensive depending on your location. If your business is in San Francisco, for instance, you have to shell out an average cost of $13,032 annually per employee just to rent office space. With a telecommuting setup, you can potentially save thousands of dollars, which you can use to pay off other necessary expenses.

Outsource Non-Core Work to Freelancers

If you have one-off tasks and non-core projects that need completion, consider hiring independent contractors to get the job done. Unlike traditional employees, you won’t have to provide freelance workers with “pricey” benefits, such as paid family or vacation leaves and health insurance. You only have to pay them for the work they finish.

When hiring freelancers, enforce a contract to mitigate risks and set proper expectations. Also, don’t rely too much on these workers. Although independent contractors can save your business money, they’re less likely to stay loyal, as they may choose to switch to other companies that offer a higher pay rate.

Cutting costs can help you boost your bottom line, allowing you to manage the cash flow crunch. Reducing company expenses (and surviving the lean months ahead) is crucial this 2020, as a drastic decline in economic activity is likely to happen this year.

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