Ways to Reduce Business Expenses
There are two main variables that will determine the profitability of your business: the revenue that is coming in and the expenditures that are going out. Controlling these two variables is essential to have a healthy, operating business.
For most businesses, the largest expenses include:
- Personnel and benefits
- Physical location
- Capital equipment
- Development costs
- Cost of goods sold , including inventory.
Focus on controlling these expenses to make the biggest impact on your bottom line.
In order to keep your finances on track, you need to know how to reduce business expenses. Keeping expenses low is a crucial part of operating a business. To lower your business costs, try these five cost cutting strategies for small businesses.
Below are the 5 ways to reduce business expenses
- Simplify staffing costs
To lower your personnel costs, try these strategies.
- Reduce your FTE by rewriting job descriptions based on needed duties
- Hire independent contractors or temporary workers when needed
- Go to a 4-day work week
- Outsource your payroll, benefits and human resource functions
- Hire a virtual assistant or answering service
- Lower your office building overhead
In order to reduce your office space expenses, consider these alternatives.
- Talk to your landlord about renegotiating your lease. Most landlords would rather have a tenant paying a little less than having an empty storefront or office space.
- If you have the space, consider sub-letting your unused space. Just make sure you discuss this with your insurance agent – changes to your property coverage may be needed.
- Look at your energy costs. Save money by installing a programmable thermostat and put your lights on a timer. Purchase energy-efficient appliances and have an energy audit done and consider implementing the recommendations.
- Turn off equipment when not in use.
- Comparison-shop internet and telephone service providers. Or save money by bundling those services.
- Save money on equipment
Most businesses need equipment to operate, whether it’s a multi-million dollar manufacturing piece of equipment or a traditional copier, printer and shredder. The cost of new equipment can add up, so consider buying used office furniture or refurbished electronic equipment. Save money by finding devices that have multiple functions in a single piece of equipment.
- Protect your business from theft
Your business may become vulnerable to criminals, including cyber attacks. All it takes is a single compromised password to cripple your business. You’ll need to invest some money in security standards, but modern camera security systems are relatively inexpensive and educating your employees goes a long way toward protecting your online presence.
- Protect your business from other losses
There are many types of business losses that can drastically affect your business, such as:
- Natural disasters
- Unexpected changes that cause your business to come to a standstill.
6. Outsourcing your Digital Marketing
- You should consider hiring a digital marketing agency
- Outsourcing your digital marketing reduces business expenses to a great extent in terms of
- Seo tools
- This can be advantageous in reducing a big chunk of expense
- Digital marketing agencies are specialised in running advertising campaigns and can generate leads if opted for.
Talk with your business management advisory agent to ensure you are covered in the event of a viable threat. Ask about ways to reduce your rates such as selecting the same provider for all your insurance needs and committing to safer ongoing practices.
These tips will help you budget for expenses more accurately and, ultimately, lower your expenses. If you can do this consistently, while also increasing the revenue your company generates, your business will become more profitable. In order to be successful, keep focusing on ways to control your spending while making wise decisions that support the growth of your business.