Every month, local entrepreneurs in my city get together and share their business experiences. Cutting business expenses requires some tough choices and trade-offs, but it doesn’t have to be a painful process, nor one that fundamentally alters your business plan. Many, many business owners before you have put to use these straightforward strategies to trim overhead, streamline operating expenses, and ultimately increase profitability.
1. Review all expenses, even the little ones
You can’t manage something which you don’t track. If you are not keeping a record of all your expenses, you should start doing it right now. Good accounting software can help you categorise expenses and help you take measures to reduce them.
I know a company that used to order pizzas every Fridays for the team. When their accountant told them that the annual bill ran into lakhs, the owner was in a rude shock. Sometimes we unconsciously ignore small expenses that can pile up quickly over the period of time.
2. Know which application is right for the job
The great thing about starting a new company or being a young corporation is that you gain the advantage of adopting the latest and most versatile technology. For example, many companies who were around in the 90’s and early 2000’s ended up installing big and expensive IT systems with now dated infrastructures. Now, new corporations today are making use of cloud software like Salesforce, Workday, and Google Docs. Know the best tools for the job using these great websites to understand each business function and what the latest and greatest tools are.
3. Check for Unnecessary Expenses
Amit Sinha, the owner of a small business consulting firm in Mumbai, finds that many small-business owners end up with expenses over time that they no longer need. He recommends reviewing your budget with a magnifying glass and making sure all of your expenses are still necessary. For example, perhaps you purchased a magazine subscription a long time ago that you no one reads. Check all such expenses and get rid of unnecessary ones.
4. Buy in Bulk
Buying in bulk is a general principle of saving money in any kind of business, whether it is the retail shop owner you see on the corner of the street or designers who bulk buy fabrics to make profits. It is always cheaper and better to buy office supplies, like paper, printer cartridges, etc or products for break room like napkins, coffee, etc. in bulk. You may be able to save thousands this way.
5. Reduce Paper Use
Like reducing energy and water usage, cutting down paper waste is good for your company’s bottom line and the environment. And there are myriad ways to do it, including:
- Print and copy double-sided by default
- Use secure electronic file exchange services such as Delivered Secure, rather than traditional courier services
- Reuse waste paper for scratch or notes
- Tighten margins and shrink fonts on printed reports
- Inform vendors and other sources of postal mail when employees no longer work for your company
- Take your company’s name off direct mailing lists wherever legally and practically possible
6. Create and maintain a set of Preferred Vendors
By tracking the destinations of trips made by sales and executive employees, corporations may gain insight into the most frequently visited destinations of their key travellers. This provides an opportunity for a company to save cost by speaking to hotels, car dealerships, and even caterers in the area to ensure preferred rates. Subsequently, companies will release a preferred vendors list so that employees can help the company save by going to a select number of vendors.
7. Technology is your best Friend
Is that document submission process taking too long? Is accounting taking away your finance team’s valuable time? Let technology help! Use optimization products to solve your problems. Many companies feel that investing in such products is a waste of money but very few realize that time is money. Using products and services saves time for all the employees and remove the chances of manual error, making work smooth and thereby, giving space to creativity.
8. Encourage Telecommuting
For millions of employers, telecommuting has tremendous cost-cutting potential. During the coronavirus pandemic of 2020 and 2021, many employers saw this firsthand.
Studies suggest telecommuting allowances and other types of flexible work arrangements have positive implications for employee morale and job satisfaction, both of which are positively correlated with productivity.
9. Use open Source Software
You can save a substantial amount of money if you start using open source software. When ordering new Laptops for the team, you can go for the ones without Windows OS. Those are cheaper and can run open source OS such as Ubuntu. Similarly, you can get open source office suite instead of Microsoft Office and save on licensing costs. There are a lot of open source softwares like CRM, Document management, etc are available which are easy to use and don’t cost a penny.
10. Buy in Bulk
Buying in bulk is a general principle of saving money in any kind of business, whether it is the retail shop owner you see on the corner of the street or designers who bulk buy fabrics to make profits. It is always cheaper and better to buy office supplies, like paper, printer cartridges, etc or products for break room like napkins, coffee, etc. in bulk. You may be able to save thousands this way.