A regular flow of funds is a must for the sustained growth of every business. But it can be difficult to maintain a positive cash-flow especially with the ups and downs of the markets. In such situations, a business resorts to cost cutting, which can include drastic measures.
There are certain best practices that you, as a business owner, can implement in order to avoid such a situation. These can help you establish a cost structure that meets your requirements and also minimizes non-essential spending. This can helps to maintain greater business control and also adds to the bottom-line.
Here are eight tips to save money, through which you can ensure the competitiveness and profitability of your small business.
Negotiate pricing with suppliers
Negotiating pricing and renewing your relationship with suppliers is one of the most effective ways to cut operating costs. Gone are the days where suppliers used to have the final word on pricing and payment structures. Most suppliers are willing to negotiate lower prices rather than losing a regular customer. Negotiating a better price for raw materials or better trade credit terms can help you save a significant sum of money.
Cut down on office supplies
Most businesses make the mistake of ordering a set quantity of office supplies each month, without checking the inventory levels. This can often lead to wastage and smaller items being misplaced, which adds to the overall costs you incur over a year.
An easy way to make sure all your existing supplies are used up before you order the next lot is to suspend the purchase of stationery for a month periodically. This can help you save a significant amount of your total supply bills.
Staff or employee costs are a major operating cost of any business. You can cut down on these expenses by automating routine processes using business process solutions and smart tools.
Another way is to resist the urge to hire someone new immediately for a vacant position. Other employees tend to cover the tasks in the absence of an employee but if it necessary to hire a new employee you still end up saving money in the meantime.
Review utility bills
It may seem like a very small step but it can have a positive impact on your business in the long run. Apart from upgrading your electrical equipment to ensure they are energy efficient, you need to monitor the energy consumption pattern of your employees. Here are a few steps to reduce your utility bills:
Restrict working hours
Implement a four-day work week during the lean period
Promote energy consciousness at work and ask employees to switch-off computers and other electrical equipment when not in use
Reduce maintenance costs
Review your ongoing maintenance costs and cut back on expenses wherever possible. For example, cleaning can be done every alternate day instead of daily. Reducing the frequency of maintenance costs can help you save money even without eliminating necessary services.
Review all expenses
Every business owner must review every business expense at regular intervals to plug all the leakages and prevent overspending. It is important to eliminate or reduce to the bare minimum any expenses that do not provide a satisfactory ROI. Small cuts across the board will help you save a large sum of money in the long term.
Outsource non-essential functions
Outsource functions like accounting or data-entry process, hiring process, managing employee conveyance, and housekeeping that are not core business functions. Not only does this save your money but also helps save time, which you can use more productively.
Use independent contractors
Rather than hiring full-time employees and spending on their salaries and other benefits, hiring independent contractors/freelancers can help you save on costs. Not only do you save money on providing a workspace and other similar benefits, freelancers bring subject matter expertise that can increase the productivity level and flexibility in your business.
Running a successful and profitable business is all about managing your finances well and making sure you keep costs under control. It is imperative to reduce non-essential expenses and divert all available resources towards more productive tasks.
Continuously reviewing your business expenses and coming out with new money-saving ideas will help your business succeed in the long run.
For example, refinancing a loan with more attractive terms and lower interest costs, renegotiating maintenance contracts, etc.