5 Ways to Cut Costs in Your Small Business

February 23, 2022 – Ariadna Quiles

Looking for a way to reduce the costs of running your business? Of course you are! Lucky for you, this blog is rich in strategies you can mix and match to save money in your company. Keep reading to find out how you can start making smarter financial decisions for your business today!

Every Penny Counts

In an economy like ours, what we do with the money we have to run our business and where we invest is essentially important for the smooth running of operations. As it fluctuates as it does, we must always be smart about when, where, and how we invest, since it could represent losses in the short-term future unexpectedly.  As a fact, multiple businesses fail because of the lack of knowledge of the owners to address the finances of their business. 
On a similar note, 61% of small businesses did not create budgets in 2018. With this blog, we will give you a headstart to essentially do the opposite of that and take a step forward into smarter decision-making when it comes to your company’s money.

1. Plan your Financials

The first tip given to any business owner anywhere in the world and any industry is to plan their finances. Starting, you will be faced with plenty of initial spending. Whether it be employees, rent, equipment, programs– you name it, the first bills are scary for any business owner that does not start with just their computer. Chances are your business will not make a profit in its first year of operations. This is why planning your financials from the get-go will be of great help.
Here are some tips to plan your business financials effectively:
-Hire only the essential employees and contractors while you get off the ground.
-Anticipate your primary needs; do not go crazy covering things you do not need from the head start.
-Estimate your expenses and your revenues.
-Do not tell yourself you will sell millions of dollars if research and your capacities say otherwise; be realistic with your financial projections.
-Review your financial documents monthly (at least).
-Have a reliable place to store your plans and data (check out our blog on Maintaining Healthy Accounting Systems).
If you need support with planning your finances, apply to become a member today and ask for the Company Support Team onsite. You can also reach out to our team to help you train your team on financial management.

2. Train your Staff in Time Management

Often in small businesses, there is very little time to train newcomers, because of the few people running the show. However, we have noticed that taking some time to train your team in time management skills goes a long way. Time management will not only help your team be more efficient at work, but they will also be able to apply that into their personal lives, being less stressed in the work environment overall.
Other benefits of training your team in time management skills include:
-Improved quality of services and products.
-People will meet deadlines.
-Your team will be more productive.
-Goals will be the only focus.
Read about our top 3 Time Management Tips in this blog.

3. Implement Purchase Order Requests (PORs)

It is easy to lose track of plans and visions; easier than one would think. Implementing a Purchase Order Request (POR) program in your business will help you and your team have financial priorities straight. 
You can start by creating a template that makes sure to align any possible requests with the essential needs of your business. Create or choose an existing template (TemplateLab has a few in different formats) and add columns for justifications and categories. Adding these columns will make your teams reflect if everything they are asking for is needed instantly or if it can wait.

4. Make the Most Out of Your Space

Studies show that 42% of offices and workspaces are underutilized. In other words, nearly half of the office spaces acquired are not being used at full capacity and represent only expenses in your financial records! However, fear not! There are a few ways to make the best out of the spaces you currently have for your business. Here are some alternatives to consider:

Rent to Others

If you have unused capacity (unused rooms for example) in the space you are using, renting fractions of your area will give other businesses like yours an opportunity to reach in-person clientele while you receive extra income.
For example, if you own a coffee shop with unused kitchen space, you can rent the kitchen space to someone else and have two businesses under the same space, attending the same clients. Think outside the box! Who knows, maybe you will be able to uncover new needs of your clientele without realizing it.

Try Remote Work

If you already have a small office space for your business and all of your employees do not fit in the area, you can opt for having some employees work remotely. You can also try rotating schedules and work hybrid with your employees.

Negotiate your Lease or Move

If nothing seems to work in favor of your business saving some money in the space you are using, try negotiating your rent with your landlord or moving to a smaller space that fits your small business needs.

5. Outsource

If and when your business faces a particular need that is likely to be temporary, try contacting other businesses or entrepreneurs that offer the service you need! Just the hiring of a new resource for your business can average $4,000, according to Glassdoor. Outsourcing is a quicker (and cheaper) way of getting your business to succeed! While you focus on what is important, projects can go on and labor costs are reduced.
Read more about the benefits of outsourcing in this New York Times article.

Let’s Save Some Bucks!

There you have it! We have just given you five alternatives you can try in almost every small business to save money and save your company from the monster that is mismanagement of financial resources. Nevertheless, if you would like to have an individualized consultation with financial support, feel free to reach out to our team. You can also make it a collaborative effort with your current team. You could be surprised at the capabilities of your teammates’ inputs!
Feel free to check out the rest of our blog to catapult your entrepreneurial journey!

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