Creating a successful business can be as much about cutting unnecessary expenses as increasing sales. While this sounds cut-and-dry, the issue is identifying which of your current expenses fall into the ‘unnecessary' category. Reducing small business costs and creating processes that will save you money over time doesn't have to take a lot of time or effort. In most cases, it's about making smarter choices. Here are a few ways you can reduce the costs and improve the bottom line of your small business.
Far too often, small businesses stay in the same location year after year purely out of habit. But doing things the same way year after year, including staying in the same location, often makes little sense - especially if your business isn't dependent upon being in a certain location. If this is the case, you could reduce business expenses by moving to a lower-rent area. By hiring a broker, seeing what is out there, and comparing location and prices, you'll probably be able to find a better deal. If you don't need a brick-and-mortar location at all, consider utilizing the services of a virtual office instead.
Negotiate Credit Cards
Many small business owners and entrepreneurs use credit cards for purchases, travel expenses, and other business-related expenditures. If you're paying high annual rates, have a good credit score and make all your payments on time, you may be able to negotiate a lower interest rate. By negating a lower rate, actively staying on top of bills and paying them when they're due, you'll save your business a good amount of money each year. If you need extra help managing your finances, you can schedule alerts that will notify you when bills are due and, in some cases, you can even schedule automatic payments.
If you're a homeowner, chances are you use energy-efficient light bulbs and appliances. If you've gone green at home, why not go green at work? According to studies, about 40 percent of office paper is discarded within 24 hours. By making use of services like Google Docs and DropBox, you can cut back on paper use and save cash. The same goes for light bulbs – while energy-efficient light bulbs tend to be more expensive up front, they'll save you money over time. Additionally, many energy-efficient appliances come with government-sponsored rebates and are eligible for green energy tax credits.
Bartering is an exchange of goods or services without cash or payment changing hands. If you're a marketing firm that needs legal aid, consider networking with legal offices in the area that may require marketing help. Once a successful bartering arrangement is reached, you'll both get the services you need without having to make a dent in your respective bank accounts. Over time, this relationship can help both parties reduce business costs and expand their client base through professional referrals.
Studies show that it costs about $4,000 to find and hire a new employee. And, once you've hired that employee, you'll have to spend time and money on training, benefits, insurance, and salary. If the times are tough and you're looking to cut costs, consider hiring freelance employees on sites like Elance, Freelancer and oDesk. On these sites, you'll be able to find qualified professionals who work remotely for a fraction of the cost of hiring full-time employees – they can be hired for a set period of time, based on the specific needs of your business.