3 powerful ways to cut costs
Successful small business owners are always evaluating expenses and identifying ways to reduce costs. This is vital not just to increase profits but also because cost-conscious businesses tend to spend less, waste less and make smarter investments.
When business owners are able to reach this level of cost-consciousness, they are less financially stressed and more growth-driven because they’re not in a constant state of financial flux.
There are a few ways you can figure out if you have expenses that can be cut, but the most efficient method is through ongoing budgeting and cost evaluation. Budgeting goes hand-in-hand with reduced business costs because it’s impossible to make smart financial decisions without a clear idea of the money you have coming in and going out of your business every month. A business budget that you use daily can become a powerful tool for effectively reducing business costs.
Here are just three ways to potentially reduce expenses:
- Use technology.
Technology allows you to save money and advance your business in ways that weren’t possible even five years ago. From teleconference services and online payment services to open-source software and remote desktop applications, there are numerous ways to use technology to reduce business costs.
One of the best ways to leverage technology in your small business is by using the cloud. The cloud, as you probably know, is a centralized location on the Internet that stores data on a proprietary site, making it accessible anytime, anywhere and from almost any device. The cloud has a number of benefits, including the fact that it’s easy to use, flexible and allows for high levels of automation. And because it eliminates the need for expensive equipment that must be managed by IT professionals, it can greatly reduce costs.
- Reevaluate your team.
Many small business owners, regardless of the size and type of business, reach a point where they must have a trusted team to help run the business. You may have a fully staffed company with a mix of part-time and full-time employees, or you may be a “solopreneur” that outsources to contractors on a project basis. But whether you have zero or 50 employees, every business owner needs to regularly analyze workflow and productivity.
Several times a year, review the costs associated with your team, and see if you can identify alternative arrangements to reduce costs and make your business more efficient. Consider making a full-time position part time, for instance, or releasing a regular part-time position and hiring temporary workers during your busy season.
- Reduce your debt.
If you use credit cards or high-interest loans to finance your business, you may be able to save a significant amount of money by aggressively paying off debt.
Take a look at how much money you put toward debt-related fees every month, and consider what it will cost if you continue to pay down the debt slowly for a period of time. In most cases, it makes more sense to reduce the debt as quickly as possible to eliminate those excessive fees and make your business more financially healthy over the long term.
Contributed by Alyssa Gregory through a partnership with US Bank.
If you liked this post you might also like: