In startup early stages, one of the biggest challenge business owners usually face is how to reduce business expenses in order to make it profitable? But it is a reality that running a business needs money. Whether it’s a manufacturing business, online business or services business, every startup has its own set of costs and expenses. You cannot ignore all the business expenses and costs because some expenses are considered to be the mandatory expenses to run the business operations smoothly.
Well, straight to the point, if you are running a startup business, which is in early stages, and facing low profitability issues then here are the 10 proven cost reduction techniques through which you can reduce your business expenses.
But, hold on, before you read the following financial tips, I recommend you to grab a blank page and create a business expenses worksheet. Mark the expenses that are supposed to be irrelevant and try to eliminate it. Here are 10 Ways to Reduce Business Expenses in Startup Stage.
#1. Hire Competent and Multi-Skilled Staff
Hiring competent and multi skilled staff can benefit your startup business in many ways. The first thing you should keep in mind that hiring employees, which have multiple skills will do multiple tasks at workplace and they can save your extra expenses in terms of wages and salaries. Secondly, if you hire well trained and professional staff then the chances of errors and mistakes will be reduced to minimum level and employee turnover will remain stable.
According to Harvard Business Review, 80% employees’ turnover often occurs due to bad hiring decisions. It means bad hiring decision actually cost to business. So, be careful when you are going to hire employees for your startup.
#2. Hire Internees to Reduce Business Expenses
Hiring internees is one of the best ways to get the work done for cheap rates. College and University students usually work in organizations as internees to gain practical experience. In return, they receive stipends for their services. You can also reduce your business expenses by hiring internees. They will work with your existing staff and help them to accomplish their assigned work.
Suppose, if you like the work of some internees you can also hire them on the spot without spending huge expenses on job advertisements and employee recruitment process.
#3. Outsourcing Project/Work
Nowadays, outsourcing projects are supposed to be the best way to reduce business expenses. For example, businesses from developed countries usually hire people from developing countries with cheap rates.
You can also cut expenses in your business by outsourcing the projects. There are several outsourcing or freelancing websites available online that helped numbers of business owners to outsource their business work. You can also outsource your work through outsourcing/freelancing websites such as
- Fiverr.com
- Freelancer.com
- UpWork.com
Before you outsource the project, I recommend you to do simple analysis that whether the project outsourcing can reduce your costs and expenses or not? If yes then outsource it.
#4. Use Computerized Accounting Software
Thanks to the latest technology. It has significantly helped the businesses to reduce their extra expenses. In previous decades, business owners usually have to hire numbers of accountants to record the business transactions and manage the finances. But nowadays, computerized accounting software can save your dollars.
These types of software are developed in such way that they can automatically handle/manage all the accounting work without hiring multiple accounting staff. All you need to hire a person for input purposes. The rest of the work will be automatically done by the accounting software. Some of the best accounting software’s are,
- Peachtree accounting system
- ERP-Oracle (Enterprise Resource Planning)
Initially, acquisition and installation of accounting system may cost you but it will surely benefit your business in the long run.
#5. Use Modern Communication Channels
Communication is an essential element of the business. Lack of effective communication can cause a huge gap between the business and its stakeholders. But using traditional communications channels can cost you much. If you want to decrease your communication expenses and make your startup business profitable then you should use latest communications channels to convey your message.
You should use E-mails instead of letters. Use Skype for business meetings. Whatsapp and Viber are awesome smartphone apps through which you can convey your messages to the relevant stakeholders.
#6. Reduce Paper Consumption
To save money, you should reduce your page consumption. Using paperwork not only increases your business expenses but also covers a large space in the office. So, you should save your important documents on computer hard drives. Do you know that 1GB drive can save your 0.9 million text pages? Yes, it’s possible. Drives can save millions of text documents and pages without creating any extra expenses and risks.
7. Get Discount Opportunities To Reduce Business Expenses
Some vendors/suppliers usually offer discount opportunities (2%) to buyers in order to get their receivables as soon as possible. If you purchase anything from suppliers and they offer discounts on fast payments then you should avail of that opportunity. Getting discounts can significantly decrease your buying costs.
#8. Use Products/Services at Trial
To increase initial sales and customer base, some new startup businesses usually offer products/services on a trial basis i.e. one month or six months. If you find these commodities are relevant with your business nature and seem to be helpful for you then you should go for it. Using these products or services can save your money at least in a trial period.
#9. Do Inbound Marketing for Advertisements
Nowadays, inbound marketing is on the horizons. Numbers of small businesses even blue chip companies are hiring professional content writers to do inbound marketing and advertise their business online. If you want to reduce your advertising cost then inbound/content marketing might be the best choice for you. All you need to find the relevant authority websites that accept guest posts. Contact them and try to publish your guest articles on these websites.
Apart from inbound marketing, you should create your accounts on social platforms and do regular social media marketing. It is the best way to market and advertise your business online.
#10. Eliminate Finance Charges
Finance charges can increase your business expenses. To reduce business expenses and make your startup profitable, you should use debit cards for business expenditures. Using credit cards can make the business owners irresponsible. To avoid this habit, you should use debit cards and spend your money wisely.
If you have an outstanding loan and paying regular interest on it then try your best to pay it on fixed maturity dates. If you make late payments, finance charges will be increased and simultaneously reduce your income statement.
There are numbers of other ways to cut expenses such as price negotiations with sellers, using free online business tools, acquisition of used equipment, and installation of energy saving appliances, and getting tax rebates. Again, you cannot eliminate all these costs and expenses but you can minimize it. Save your pennies as much as you can. In this way, you can easily reduce business expenses and make it profitable.
Now, it’s your turn. Do let me know in the comment box what type of cost reduction techniques you have adopted to reduce your business expenses?
Images: ” Businessman Tearing The Word Costs On Paper Over Gray Background / Shutterstock.com“
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