Did you know that 29% of small businesses fail because they run out of cash? Now, 29% might not seem like much, but it’s high enough to take notice. Indeed, 2 out of 10 small enterprises don’t survive past their first anniversary. So, why does this happen? And what can you, as a small business owner, do to avoid becoming part of these statistics?
Read on to discover 7 practical ways to cut expenses in your small business and help your business to be successful and go from strength to strength.
Table of Contents
Do These To Cut Expenses In Your Small Business
1. Use Less Electricity
Small businesses need a range of electric appliances and equipment, and so their electricity bills are a regular expense. One practical way to reduce these bills is by using energy-efficient gadgets. Devices like CFL bulbs have a higher initial cost but save money in the long run.
An energy audit can help identify possible ways you can save electricity. Also, government schemes that promote green energy can help you to cut down on regular expenses. Additionally, installing proper insulation or using a solar system will reduce electricity consumption.
2. Operate A Virtual Office
Say you have a digital business. As you do most of your work online, there’s no need to maintain dedicated office space. You can use technology and remote solutions to save on rent, furniture, and commuting costs.
Moving to a fully virtual business model allows you to cut down unnecessary costs. Virtual cloud software will enable your employees to work from the comfort of their homes. Therefore, you won’t need to spend money on upgrading your office infrastructure. Of course, this business model is not suitable for all types of businesses.
Here Are Some Handy Virtual Platforms That Will Help Your Business To Go Digital:
- Google Meet
- Microsoft Teams
- Slack
- Discord
3. Negotiate With Your Suppliers
You’ll be surprised how much you can cut down your expenses by negotiating with your suppliers, vendors, and clients. Today’s market is hyper-competitive, and this goes for your suppliers too. Therefore, chances are they’ll be prepared to offer you a better deal to stop you from switching to one of their competitors.
This is especially true if you’ve been using your suppliers for a long time. Suppliers value their customer relationships and are likely to reward you for your loyalty with a discount.
4. Explore New Processes
Some small business owners are reluctant to implement new systems or strategies. However, being stuck in your ways can lose you a lot of money. For example, today’s customers are more likely to trust your business if you have a modern, up-to-date website. Updating your website to include the latest tools such as online payment systems can help you to attract new business.
Embracing the latest tools will also make your business more efficient and so cut your expenses.
Here Are Some Of The Tools And Technologies You Should Investigate:
- Cloud computing
- Social media marketing
- Website SEO
- Online advertising
5. Use Free Software
In today’s digital world, every business needs software to run properly, whether it is word processing, photo-editing, online storage, or CAD tools. However, software subscriptions can be very pricey, and out of the price range for many small businesses.
Luckily, there is a range of free alternatives for just about every type of software. This can save you significantly on monthly and yearly subscription costs. So, unless it’s impossible to replace paid software with an alternative, try to use free tools. Gone are the days when open-source products didn’t meet business demands.
Here Are Some Suggestions:
- Gimp
- Canva
- Open Office
- FreeCAD
- Sumatra PDF viewer
6. Hire Freelancers
With the digital revolution, you now have access to a wide range of freelancers across just about every sector who offer professional services at reasonable rates. Hiring freelancers can considerably reduce your staffing costs. Firstly, you don’t need to pay them regular wages, but you only need to pay them when you have projects that need to be completed. Secondly, you’ll save greatly on expenses such as benefits, business trips, and training.
7. Buy Second-Hand Products
Let’s face it. Your business doesn’t need to buy brand new workstations. The second-hand market offers a range of items in near-new condition for the fraction of the cost. Smart business owners use platforms like eBay to find the best deals on second-hand furniture and gadgets.
Whether furniture, computers, machines, or tools, buying second-hand products in good shape can significantly cut your expenses. Furthermore, if you do not need the latest features, an older machine will still do the job efficiently.
Summing Up
Small businesses do not have the luxury of funding or public investment, so it’s critical that you make the best use of every penny you spend. It is important to start small if your business is new, and as profits increase, you can ramp up your spending.
Above all, it is essential to make use of new technology. Modern online platforms save time, effort, and money, so being tech-savvy is essential.
