On average, business insurance costs go up by 10-20 percent each year. Majority of airlines are still adding “fuel taxes” to every ticket even though oil prices have dropped down by 50 percent. Wholesale suppliers are constantly increasing the cost of goods used by small business in their production.
With all that said, it is easy to conclude that small businesses are constantly pressured by increasing costs, so having control of them became more important than ever before. According to Bloomberg 8 out of 10 small businesses fail within the first 18 months of doing business.
Most of the small business owners focus first on increasing sales, but lowering their expenses is as equally important. They have to constantly search for new creative ways to save money. Even if the business is prospering it is always a good idea to continue with money saving actions in order to be prepared for unexpected market downturns and other big price tag surprises that can occur.
Finding the right ways to save money is a lot easier than you might think, and the effort and cost to implement those changes can be surprisingly minimal. Here are 5 cost saving ideas you could try implementing in your business.
Use free or open source applications instead of expensive software
There are plenty of open source or completely free applications that can replace almost every pricey software. Small business owners should definitely ditch expensive software since there are many online tools and mobile apps that can satisfy all of their basic business needs. For example PDF to Word Converter could be used for PDF conversions, FreshBooks for accounting, OfficeSuite for spreadsheets, word processing, and document editing, Google Drive for collaboration and file sharing, Canva for design and the list goes on. Before buying expensive software, you should definitely try searching for their free counterparts.
Instead of hiring a full-time employee for work that is only periodically needed, it is always a good idea to outsource those kinds of tasks. Small businesses can only benefit from freelancers by hiring them for short-term tasks that are periodically needed. Even the most expensive talent can be cheaper for consulting purposes than a full-time employee. Periodical tasks that are suggested to be outsourced are ongoing functions like payrols, administrative tasks, accounting… Hiring a part-time virtual assistant is also worth considering.
Reduce energy costs
According to the Small Business Administration, companies which reduce their energy costs only by 10 percent can increase profits from 2 percent (retailers) all the way to 4 percent (restaurants & bars). You could reduce energy costs by installing and using energy efficient appliances, switching to LED office lights which use 9 times less energy than standard halogen lights, using smart thermostats in office spaces etc.
Reduce paper usage
The EPA estimates that companies are spending around $80 per employee on paper every year. At first sight, this doesn’t look like a huge number, but multiplied by 50 employees it gives us the $4,000 annual cost and that’s without printing. If your company day-to-day operations consist of closing a lot of business deals, this number can easily double or even triple. The best advice is to move from paper to digital files. You could easily store all files in the cloud and there are plenty of document signing apps available as well so there is really no need for physical paper anymore. Did we mention that by cutting paper usage you are also saving the environment?
Simply ask for discounts
Whether you are a small business or a big corporation, the chances are, you are repeatedly doing business with the same vendors and companies. This is the simplest thing you could do, just ask them for a discount, you’ll never know until you ask. There is a big chance that you will get a discount since you are their loyal customer and they know that it is a way more expensive to acquire a new customer than to keep the existing one.
Running a business is not an easy job. Every business is different, and there are some costs that you can’t simply avoid, but in every company, there are at least some money potholes that you can shut down. We hope that these 5 ideas will help you get started.