You have two choices when it comes to turning a bigger profit: increase your revenue, or cut your expenses. As a rule, we have far more control over how much we spend than we do over how much we earn. Which is why the most successful small business owners utilize dozens of practical methods for cutting costs and lowering their overhead. Here are three strategic money saving suggestions we think are well worth exploring.
1. Moderate Your Growth: Resist the Temptation to Operate Beyond Your Means
Pets.com, Crumbs Bakeshop, Starbucks, and Krispy Kreme Donuts are just a few real-life examples of how growing your business too quickly can be just as risky as not growing at all. Experiencing that first flush of commercial success is exhilarating! But it’s in your best interest to keep overhead costs practical - especially during your company’s initial growth phase.
To avoid unnecessary or premature spending, resist getting caught up in the glorified notion of spending money to make money, and consider these cost-cutting tips as you scale:
Don’t use a sudden increase in sales as an excuse to pay more for a space you don’t need. Clients will be far more impressed if you consistently meet their needs from a functional, well-staffed, and welcoming environment, than they will by hundreds of square feet filled with costly décor.
Take some time to explore the pros and cons of introducing a bring-your-own-device (BYOD) policy that reimburses employees for using their personal laptops, tablets, and cell phones at work. The financial upside of BYOD is that it does away with expenses related to purchasing, maintaining, and providing data plans for internet-enabled devices.
Mull over the many money saving perks that go along with greening your business. Becoming more environmentally conscious is good for the planet - but it also reduces energy costs, trims office supply and vehicle expenses, and opens up access to many government incentives.
For a more innovative approach to saving money while you grow, why not try bartering for the things that your company needs but can’t necessarily afford?
Business owners in many service industries have been known to exchange their professional expertise for everything from advertising space to website design work. Just remember that tax implications exist for both parties involved in a barter exchange. Be sure to seek advice from your accounting professional, and document the process at fair market value.
2. Take Stock of Your Internal Procedures
Keeping accurate business records is crucial for any number of reasons. But when it comes to saving money, documenting your company’s internal procedures is as important as tracking expenses.
Smooth-running operations that promote business efficiency rely on order and discipline. So, whether it’s your process for fulfilling orders from requisition to delivery – or your procedure for invoicing and collecting customer payments - every one of your internal systems should be structured for full cost effectiveness.
When you take the time to record, review, revise, and revisit exactly what goes into the various actions your business performs every day, you’ll be in a better position to:
identify procedural inconsistencies,
address potential time and money leaks,
pick up the slack during employee absences, and
get new hires up to speed quickly
Documenting your internal processes should ultimately tell you who’s involved in delivering a particular product or service, the sequential steps that they follow, and how other company procedures are ultimately affected as a result of their actions.
In the words of statistician and management consultant William Edwards Deming (best known for his innovative work with leaders of Japanese industry following WWII), “If you can't describe what you are doing as a process, you don't know what you're doing.”
3. Time is Money: Are You Leveraging Technology to Boost Your Efficiency?
There’s no longer any real excuse for commercial inefficiency with the broad range of technological aids that are at our disposal. From automated appointment schedulers, to project management software, to apps that streamline basic bookkeeping tasks, successful business owners are reaping the many benefits of tools designed to help you work smarter.
Research suggests that not only do mobile apps save small business employees some 725 million work hours each year, 66% of small business owners rely on mobile devices to manage their operations. At the same time, cloud solutions of all kinds have been shown to reduce the average small business workload by a minimum of 40%.
So, what are you waiting for? Taking advantage of technology has never been easier with most app and software providers offering free trial sessions or complimentary, pared-down versions of their programs. Take some of these flexible, highly integrative, access-from-anywhere products for a test drive and discover how they can save your business both money and time.