Practical Tips on How to Cut Expenses on Your Business

As the owner of your own business, it's normal for you to look for ways cut costs and raise your profit margin. There are some obvious ways to save money. You’ve heard them all before—suggestions like shopping around for the best prices on everything from office furniture to cell phone contracts, barter for services with clients, and keep hiring to a minimum.

Check out below some of the creative ways to save money, which even some expert entrepreneurs can pick up a tip or two from.

Outsource front desk tasks

Rather than bringing on a full time employee to answer phones or handle emails, you can outsource these administrative tasks to virtual businesses. For example, you can hire a virtual assistant on a part-time basis to handle your emails. You can also outsource your receptionist position to handle your incoming calls, set a voicemail for you, and send you email alerts as specified. There are several pricing options to choose from, but compared to hiring someone full time, you’ll save money.

Try shared workspaces

If you’re just starting out, you could check out the possibility of renting shared workspace. A lot of cities are now renting out space within a building for this purpose, since nowadays so many businesses are run primarily by a laptop and smartphone. You typically have access to conference rooms so you can meet with clients and have a workspace where you can get online, make calls, and be productive.

It’s certainly cheaper than renting your own space and it’s a good way to network with other business professionals who use the office too.

Use cheaper phone options

Cell phone bills can be expensive, especially if you’re paying for several lines. While many businesses can’t survive without cell phones, there are ways to keep costs down. For instance, use long distance apps like Viber, which takes away from your data rather than your minutes. If texting costs are adding up, try WhatsApp, an app that enables you to text for free for the first year, after which it costs $1 a year.

You can also use Skype, which offers video conferencing, or GoToMeeting for conference calls. Both offer free options.

Practice energy efficiency measures

The majority of businesses are now focused on implementing measures that reduces the burden on the planet’s resources—and the savings soon mount up with minimal impact on cost. Here are a few ideas:

• Everyone knows the first thing to do is to replace old light bulbs with the modern LED equivalents. The cost has dramatically fallen in recent years, and these bulbs save 80% over their traditional counterparts.
• Keeping heating and cooling systems at optimal levels is an easy way to save 10% per year in fuel costs.
• Ensuring windows are closed, computers are turned off when not in use and all lighting gets switched off over night is another easy fix to save money.

When it’s all added up, these simple changes could save between 10—20% per year on fuel bills. In fact, they go further to say that these savings are the equivalent of increasing revenues by 5%!

Question every expense line

It’s easy to get sucked into buying the latest gadget, upgrading equipment, refurbishing office space, buying a new line of product or upgrading your company vehicle fleet. It’s far cheaper to maintain items that have been proven to work, but might just be last year’s model.

Saving money here is about being practical and almost Scrooge-like in your outlook. Resisting the temptation to add costs to your P&L each month can bring outstanding rewards at the end of the financial year.

Look at your largest costs first and see if savings could be made or a simple renegotiation in payment terms is available. A change in financing could free up cash for other projects. For example, leasing vehicles rather than purchasing them outright could be a solution in the right circumstances.

Improve productivity

For many of us, product and employee costs are the largest expense line. Improving the productivity of employees by squeezing more from less should produce profitability increases. You can manage this in several ways:

• Invest in tools and software that assist the employee with their work so that less people are required to increase output.
• Put off hiring new people when someone leaves or retires and redistribute their workload among existing employees. This saves salary costs as well as potential recruitment fees.
• Improve working conditions to match the culture of the company. Small changes in the environment often have a dramatic effect on staff morale.

If you have a very fast-growing business, this approach might not be feasible, but it’s wise to always question the need to bring additional FTEs (Full-Time Equivalents) on board. That’s a sign of good management and cost control.