When you operate a small business, the dream is to grow and thrive, but sometimes it can feel like a struggle just to stay afloat. Turning a profit requires an excellent product or service, a strong team of productive employees, and a commitment to a solid business model. At times, just getting to profitability means having the right cost-saving ideas.
Profitability is also influenced, to a large degree, by what you don’t do—more specifically, the money you don’t spend. If you take simple steps every day to save your company money, you’ll be better positioned to weather the financial storms that come your way.
1. Hire Remote Employees
Remote work is on the rise. Between 2005 and 2015, the number of remote employees increased from 1.8 million to 3.9 million in the U.S. alone. Hiring remote employees open up a wider pool of talent, including qualified applicants in less competitive markets.
If your organization is located in San Francisco, you’ll have to account for the high cost of living. But if you hire equally talented employees in Tampa, Florida (where consumer prices are more than 45% lower), you can save a great deal on salary costs.
2. Use Open-Source Software
Add up the costs of all your business software, and you’re probably spending thousands of dollars per year. In most cases, there are excellent open-source alternatives available for free.
For example, OFBiz is a powerful automation suite that supports customer relationship management (CRM), enterprise resource planning (ERP), eCommerce, content management, and much more–-and it costs nothing.
Free programs like Openbravo support supply chain management, merchandise management, reporting, and other retail-centric operations.
There are open-source software options for word processing, photo editing, project management, and just about everything your organization needs.
3. Use G Suite to Its Full Potential
While we’re on the subject of free software, Google apps are worthy of their own section. Docs and Sheets are commonly used in place of Microsoft’s word processing and spreadsheet programs, and Google also has programs for app development, form creation, presentations, and even web design.
Keep your business connected with tools for online chat and conferencing (Hangouts), email (Gmail), file storage (Drive), and scheduling (Calendar). Some companies are even using G Suite for project management — add-ons like ProjectSheet make this possible.
Best of all, everything is managed in the cloud for easy collaboration and dependable storage. Much of the Suite is free to use, and access to the premium apps is available for as little as $6 per user, offering your company another great way to save money.
4. Outsource Your Bookkeeping
Understanding labor costs is essential to profitability. Accounting and bookkeeping, in general, are very costly to microbusinesses and these in-house positions are quickly being outsourced to more cost-efficient solutions providers.
An in-house bookkeeper will usually run you between $2,400 and $3,000 per month in the U.S. By comparison, outsourced bookkeeping can cost as little as $400 per month. The specific costs will depend on the nature of your organization, the intensiveness of your bookkeeping, and the skill level of the accountant, but outsourcing is always the more cost-effective option.
5. Be Smart With Your Electricity
Many business owners don’t realize just how much they’re needlessly spending on electricity. For instance, do you leave your computers on overnight? You may be adding $200 or more to your annual energy costs.
When leaving the office, always turn off the lights, computers, and any other energy-zapping appliances. When purchasing office equipment and appliances, look for options that are Energy Star certified.
Even when devices are turned off, they may still consume electricity, so consider plugging your equipment into power strips that can be turned off at the end of the day. If your organization is located in a state with energy deregulation, you might also shop around and compare energy suppliers.
6. Pay More Up Front
It may seem counterintuitive, but sometimes it pays to invest more upfront. Vendors offer better deals to businesses that buy in bulk, and software companies are more generous with subscribers who pay for a year of service upon signup.
For example, popular online marketing tools start around $179 for month-to-month. However, if you pay for a full year upfront, the monthly cost is $149. That’s a difference of $360 per year.
7. Use Independent Contractors
Maybe you don’t need a full-time developer right now. Maybe you just need a new website design and some occasional maintenance.
In situations like this, you may benefit from contracting the work to a freelancer. You’re not responsible for the taxes and benefits associated with an employee, and you only pay them for the hours you need.
Sites like Upwork make it easy to vet and choose high-quality freelancers with every possible skill set, from writing to graphic design to engineering. For smaller projects (like logo design), you might even use services like Fiverr.
8. Take Advantage of the Available Tax Deductions
Whether you manage your own business taxes or work with a professional, make sure you’re taking advantage of every deduction that’s available to you. You have the ability to deduct business-related vehicle usage, payments to employers and freelancers, utilities, insurance, and much more.
For a home-based operation, you can deduct a portion of your rent or mortgage interest, home maintenance expenses, and even certain home care services.
9. Always Get At Least Three Bids
When speaking with vendors and suppliers, never settle for the first offer that comes along. Take the time to compare the vendors and rates that are available to you, and go with the option that offers the best deal without skimping on quality.
Vendors will bid high at first and eventually will reduce their bid once they see you have other (lower) bids available. While the lowest cost doesn’t always mean the best quality, it does mean you can save money for your business and get similar value for a considerably lower fee.
10. Look to Cost-Effective Company Perks
Perks like free lunches and gym memberships can entice prospective employees, but they can also be costly. The solution is to offer perks that promote productivity and engagement without costing money.
Flex days are a good example. By giving employees the ability to work from home or adjust their hours on certain days, you provide excitement and motivation without spending a dime.
How Do You Save Money in Business?
Not every business cost-saving idea on this list is likely to work for you. Depending on the size and nature of your business, you may require a full-time accountant, premium software, or in-house employees. By implementing just a few of these suggestions, though, you can increase your bottom line every month and allocate more money to grow your business.
Do you have your own tips on how to save your company money? We’d love to hear them! Please share your cost-saving ideas for companies in the comments.