As a business grows, it’s easy to let expenses scale up proportionally. And before you know it, your costs of doing business have a significantly negative impact on the bottom line. If this is true in your situation, you may need to revisit the drawing board and slash some of these unnecessary expenses.
Simple Steps to Save Money
Running a business is no different than running your household budget. To improve your bottom line, you either have to increase your income or slash your expenses. Boosting revenue is always an option, but it takes considerable effort and investment. Expenses represent the lower hanging fruit. Every business has costs that are easy to cut back or trim away.
Here are a few that you may be able to eliminate:
1. Credit Card Processing Fees
“As a business owner, credit card interest rates can take a big chunk out of your profits. While renegotiating your interest rate with your credit card company might be an uncomfortable plan to execute, it can have a significant impact on your company’s revenue stream,” Payment Depot explains.
In some cases, it’s actually fairly easy to cut costs. Most credit card companies will be willing to reduce interest rates, lower (or drop) annual fees, or waive late payment fees when a client reaches out. If your current processor won’t, you may be able to switch providers and leverage yourself into a better deal.
2. Office Supplies
Have you ever sat down and calculated how much money your business is spending on paper, ink, and other office supplies? In some cases, it’s thousands of dollars per month.
If you’re aggressive about reducing costs, you may choose to go paperless. This would save a considerable amount of money, while simultaneously enhancing efficiency. If you aren’t ready to go paperless, you can still save money by eliminating unnecessary purchases and buying in bulk.
3. Staffing Costs
“Perhaps the biggest money-saver is hiring freelancers remotely,” Business.com suggests. “If your workers can do the same job that they do in an office from the comfort of their own homes, why would you pay rent, buy furniture and pay for utilities?”
As freelancing becomes more commonplace in the job marketplace, an increasingly large segment of the work population is willing to work as independent contractors. This makes it easier to get away with hiring workers and avoiding some of the costly benefits – like retirement match programs and healthcare – that dramatically increase labor costs.
4. Office Space
Are you currently in an office that’s a little too rich for your needs? Whether it’s location, size, or amenities, there’s typically an area where you can cut back and save money. Moving into a slightly smaller office a few blocks away, for example, could save you thousands of dollars per month (without much negative impact in other areas).
5. Employee Perks
You have to be careful with employee perks and benefits. You don’t want to eliminate something that’s going to put a drain on morale. But there are usually some simple adjustments you can make to lower costs.
For example, let’s say you provide breakfast foods and coffee in the break room every morning. Depending on what options you offer and how many people are in the office, this could cost you a few hundred dollars per month. Asking employees to bring their own breakfast and coffee – or asking for a nominal contribution – could lower your expenses considerably.
6. Cut Back on Business Travel
Business trips are expensive. Between flights, accommodations, food, transportation, and other expenses, it can cost thousands of dollars per employee per trip. But the good news is that very few industries actually require business travel any more.
Instead of spending tens of thousands of dollars annually on business travel, why not pay a couple of thousand dollars for remote meeting software and technology that allows your employees to remain in the office?
Putting It All Together
Some expenses are easier to cut than others, but almost every business has some fat that can be trimmed away. By taking the time to consider your current balance sheet and budget, you may be able to identify some key areas for saving and improve your profit margin in the process.