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For Your Small Business March 15, 2022

Cost-Cutting Tips for your Small Business

Nearly 50% of new businesses fail within their first few years of operation. Although many enterprises strive to increase their revenue by increasing sales and looking for more avenues to make money, having good money management tips is essential for ensuring success. Here are cost-cutting tips for your small business.

1. Reduce Your Meetings

Reducing meetings, especially those outside your business premises, is vital for saving money. Cutting off the number of meetings you and your employees have in a calendar year will cut costs on food, supplies, fuel, and other meeting expenses. In 2018, fuel costs made a staggering 24% of vehicles' average total costs per mile. In particular, lessen information-sharing meetings and use the time to do actual work. Reduced meetings will cut down costs and increase productivity.

2. Limit Your Borrowing

While loans are vital in helping a small business stay afloat, they are notorious for increasing costs in terms of interest. A hard money loan term takes between six months to a year, although some can take up to three years in certain circumstances. Since paying interests loans for an extended period tends to increase expenses, limiting your borrowing will significantly reduce your expenses.

3. Reduce Paper Use

Going paperless has the potential of cutting down costs in your small business by reducing printing costs, storage costs, and mailing costs. Reducing paper use is also effective in increasing the efficiency of your business premises and saving your money on utility bills associated with paperwork. The best way to reduce paper use is to reuse waste paper, work with electronic file exchange services, and stop using direct mailing lists.

4. Review Your Finances

Make it a habit to review your finances regularly to help cut down costs on your small business. Review your sales, procurements, expenses, and taxes as well. Look for things that can be adjusted or eliminated on your procurement and expenses to help cut costs. It would be best to hire a tax specialist to take care of your taxes. About 70% of small businesses hire tax professionals for tax preparation and IRS concerns. The habit of tracking your finances will enable you to manage and reduce any unnecessary costs in your small business.

5. Use Word-of-Mouth Marketing

While businesses spend a lot of money on marketing, not all work out as intended. That said, small businesses should replace ineffective marketing strategies with word-of-mouth to cut costs. It is a cost-effective and influential way to increase awareness about a business and its products and services. Some of the word-of-mouth strategies your business can use include social media conversation, customer referral programs, and brand ambassador programs.

6. Retain Your Employees

The cost of hiring new employees can be high and small businesses should do everything in their power to prevent laying off workers. That said, small businesses should focus on retaining good employees to reduce costs. High-performing employees are a valuable asset to your small business, hence the need to retain them. Retaining these employees will help increase your business's productivity and reduce the costs of employing new staff.

7. Ask for Discounts

Businesses spend a lot of money procuring goods and services to make their businesses operational. Therefore, asking for discounts from your suppliers is a great way to reduce costs in your small business. Look and work with suppliers who offer reasonable discount rates. Take advantage of any promotional offers given by your suppliers to reduce your expenses on procurement.

8. Invest in Technology

Investing in advanced technology can help reduce costs in a small business. Adopt technologies that can help ease work in your enterprise. The right technologies will enable your employees to automate repeated tasks, increase efficiency, and reduce third-party expenses.

Bottom Line

These money management tips will help cut expenses in your small business. Start using them today to lower your expenses and save money.

 

This article was written by Sean Finucane from Engineer Your Finances and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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