5 Tips to Reduce Your Business Expenses to The Minimal
Setting up a business from scratch is a dream of every budding entrepreneur in the 21st century. What attracts most people to this lifestyle is the fact that you get to be your own boss, the work hours are as per you want, and most importantly, you know that whatever your firm earns or how much money the company makes, it’s because of your direct input.
However, where entrepreneurship has its benefits and golden points, it also has a few limitations. One such limitation, is financial limitation. Money matters, a lot, for firms of all shapes and sizes, there are no two ways about it. This means that if you don’t manage your business expenses and finances, poof, it won’t be long before there is no firm to manage.
The fact of the matter is, money isn’t necessarily only attached to the sales your firm notches in a month, it is also associated with how you handle it. The less money you spend on things that your business doesn’t need, the better your business operates in the long run. The more lavishly you spend the money, with no regards to the immediate and future needs of your firm, the more likely it is that you will tank your firm in the near future. In general, if you want to enjoy a decent reservoir of money, you have two options. You can either add to your sources of income or you can cut down on your expenses.
If you pick the former, it might seem like a great idea on paper. After all, you are thinking about adding to your business capacity, which means that you will probably enjoy more success in the future. However, this option involves a lot investment on your part. You cannot just add to your sources of income like you’re adding numbers, it’s a very lengthy and extensive process. On the other hand, reducing your expenses and cutting down on the money you spend on things that you or your company can do without, only requires patience and smart decision-making on your part.
If you’ve made up your mind that to have more cash on hand, you’re going to follow the latter option, we’re going to help you by giving you 5 tips on reducing your business expenses to the minimal.
#1. Think Outsourcing for your Business
If you need something done, you can either order your HR department to look for a potential candidate, call them for an interview, negotiate a monthly salary with them, then maybe train them for a bit, and then get the thing done.
OR you can NOT do all that, and just hire another small firm to carry out your specific task.
Which sounds simpler?
Furthermore, in case you’re still not persuaded by the argument, outsourcing a task to some other firm or person, results in saving up a lot of money and TIME. If you’re a small business that sells handcrafted shoes, you don’t have to hire an IT department to develop and manage a website for you so that you could reach potential clients. All you have to do is head over to freelancing websites, like Upwork or Fiverr, look for a quality freelancer, and hire them to do your job for a fraction of the money that you would pay to an IT department.
#2. Negotiate B2B deals like your life depends on it
It is common for a business to seek help from other businesses to carry out its tasks. Think about a small furniture business that needs a delivery truck service to deliver the goods to their clients. The delivery trucks aren’t part of the furniture company, but they still provide their service to the furniture company as part of a B2B deal.
These Business-to-Business deals are quite common in the current business climate, and many firms are benefiting from this concept. However, it is important to know how much you can afford to spend on these business expenses, because if you are paying more than you are earning, what’s the point, right?
In such a situation, it is a good idea to always send your best negotiator for these B2B deals. Negotiating with another small business, isn’t like negotiating with a multinational corporation. When you negotiate with another small business, you need to keep in mind that their needs and motives are as simple as yours. They also want their company to prosper, spend less, and earn more. Considering that, it is important to make sure that you propose a deal that is a win-win for both the firms.
#3. Reconsider your hiring policy
Your employees are the bread and butter of your business, the sooner you realize that the better. Having said that, it is quite crucial for you, as a business owner, to hire the best people for the job. Hiring someone who doesn’t deserve the job, will not only be bad ethically, but will be bad for your business as well. It is true that good talent doesn’t come cheap. But think of it like this. Won’t you be ok with spending a few extra bucks to hire the right talent, instead of hiring the wrong person and paying for their incompetence every single day?
#4. Embrace technology with open arms
As we’re living in the age of information, if you don’t embrace technology with open arms, you and your business will crash before you even get off the ground. Nowadays, you can use social media, state of the art technology, and the most modern technological advancements to your advantage and ensure that your business progresses like never before. One great advantage that using modern technology has, is that it allows you to considerably reduce your expenses by cutting down on the ineffective human element.
#5. Don’t work HARD, work SMART
The key to success is NOT in working hard, it is in working SMART. Make smart decisions that aren’t always so obvious, but not that hidden either. For instance, think about hiring interns, who are in need to experience, to carry out supporting tasks. WHY? Because interns are usually paid lesser than the industry standards, which means, you can get more done even when you spend less.
If you follow these steps now with determination and consistency, be sure to have a reasonable rate of reduction in your business expenses, thus increasing your savings and happiness.
I am an author, living in California USA. Author of Real Leaders Don't Follow, published 2015. Management Consultant. Columnist. BloggerRead Full Bio