As per data from the US Bureau of Labour Statistics, approximately 20% of small businesses fail within their first year of operations. Inadequate funding or working capital is one of the prime reasons many small businesses go out of operations. Therefore, penny-pinching in specific areas of your business is equally as important as improving your profitability to stay afloat. Please consider these points if you wish to learn more about critical areas you can economize to save your business money.
- Utilities
The average cost of utilities for commercial buildings is reportedly $2.10 per square foot. Utilities are essential to your company’s everyday operations, so these costs can quickly add up and take a massive bite out of your tight small business budget. Also, there are few, if any regulations, to protect your business from expensive utility contracts. Nevertheless, there are many things you can do to lower your utility costs and save significant money. For starters, you can reduce your usage of core utilities to cut down on your spending. As such, you can conserve water by turning off taps when not in use, fix all leaky pipes and fixtures to prevent wastage, and install water cisterns in your toilets to lower water usage when flushing. For electricity, you can unplug unused gadgets, turn off office lights when not in use, and take advantage of sunlit rooms to prevent paying high electricity bills.
Additionally, you can switch to energy-saving lightbulbs, replace air filters regularly, and seal any air leaks for a more energy-efficient building. Furthermore, switching to cheaper utility providers can also be a great way to lower your overall utility bills. Consequently, you can compare about six business energy suppliers to find the best and most affordable deal for your company’s needs. If you decide to switch suppliers, your new supplier will typically alert the current supplier of your decision to change so you can enjoy a smooth transition as long as you do not have any outstanding bills.
- Advertising
Many companies typically spend up to 8% of their gross revenue on marketing and advertising. However, advertising has evolved into a more accessible and more affordable task, so you can pinch many pennies in this area and enjoy some significant savings. For instance, you can invest in creating a great online presence through a business website where your prospective clients can visit to obtain critical information concerning your company. In addition, you can boost your social media presence by signing up for Facebook, Twitter, LinkedIn, TikTok, and Pinterest accounts, depending on the nature of your business offerings. With the right social media strategy, you can sell yourself to the right audience and build deeper connections that can make you successful in no time.
Furthermore, you can leverage email marketing as a low-cost and effective marketing solution to promote your brand. Email marketing lets you send tips, discounts, news, and other information to your clients to build rapport and keep them aware of your business. Furthermore, you can also leverage your clients to promote your brand for free cost-effectively and cleverly. For instance, a customer referral program is a great idea to broaden your existing client base. Also, you can request reviews from your customers to display on your website and social media accounts to attract prospective clients. In addition, you can appoint your loyal customers as brand ambassadors and offer them branded materials and free versions of your products or services. This way, you can get them talking about your company to friends, family members, colleagues, and acquaintances.
- Insurance
Insurance is undoubtedly a necessary expense no modern company can afford to avoid. Without insurance, a workplace accident or lawsuit can put you out of business. As such, it is prudent to sign up for as many relevant business insurance policies as you can reasonably afford. Worker’s compensation, property, unemployment, and disability insurance are some of the essential insurance policies you should ensure that your business is covered for. For this, you can consult your insurance broker and discuss all aspects of your coverage and ask them to shop around to get your business the best deal.
Also, explore multiple ways to reduce your risk to lower your monthly premiums and save even more cash. For instance, having fire alarms, security systems, and sprinkler systems can make you eligible for insurance discounts from some providers. Furthermore, you can also increase your deductible as an excellent way to reduce your premiums. However, ensure that your deductible is not so high that your business cannot afford it if you had to make a claim. Also, remember that if you are a member of a professional or trade organization, you may be eligible for group rates.
- Equipment and office supplies
There is no denying how essential your equipment is to your operations. However, brand new and high-end equipment can be a significant business cost you need not necessarily incur. Therefore, consider second-hand equipment when shopping, since used equipment is always cheaper than their newer counterparts. However, it is critical to diligently search for these pieces of equipment to find the best deals for your business. For instance, if you search hard enough, you can get barely-used and affordable equipment sold due to an enterprise’s closure or a company overstocking equipment by accident.
Also, you can search for various coupons and discounts from dedicated coupon sites that enable you to get used and even new tools at a fraction of the price. Additionally, purchase office supplies in bulk since the cost per item typically reduces if you buy enough at once. Still, it is critical to do the math to ensure that a more significant purchase makes sense concerning cost and necessity. Finally, the prices of mailing supplies, postage, paper, and ink can add up to massive amounts over time. Therefore, consider running a largely paperless operation to ensure that you file most of your paperwork on your computer. This way, you can lower or eliminate the recurring costs of getting supplies and save money in the long run.
- Office space
One of the few positives of the pandemic is the proof that several companies can operate efficiently outside a defined office area. Consequently, you can rethink your office space needs to identify savings opportunities you can take advantage of. For instance, going paperless can reduce your need for storage space and enable you to relocate to a smaller and less costly office space. In addition, consider shared office spaces since this arrangement can be more affordable than leasing independent property. However, you may have less control over utilities if you choose to share a workspace and will likely have to pay for a percentage of all shared services.
Also, if your business doesn’t need to be run from commercial premises, you can operate from home or go mobile. Many tech repair businesses have adopted this strategy and now operate mobile tech services that offer in-home computer sales and repairs so that you can follow this example. Finally, you can allow for remote working if your business permits it and you are willing to let your workers work from home. Owl Labs data indicates that 16% of companies worldwide are fully remote with no office or headquarters, so it is possible to operate without a physical office space altogether if feasible.
- Staffing
The costs of hiring and keeping workers can also eat into your budget, so staffing is another critical area you can economize to save money. For instance, your spouse may be willing to and capable of taking on some responsibility in your operations, saving you the cost of hiring someone else for the role. Likewise, involve your children of appropriate age in your business operations as a way to lower staffing costs and save money.
Also, you can hire contract workers or freelancers to save on employee expenses and taxes, depending on your business. Partnering with a freelancer is particularly helpful if you do not require a specialized employee on a full-time basis. For instance, you may not need a full-time content writer, graphic designer, or web developer for your daily operations, so you can hire them on an as-need basis to avoid unnecessary employee expenses.
- Supply
If your company makes regular and substantial wholesale supply purchases, every penny saved is a penny gained. Therefore, fish out the best deals on supplies that can have a significant impact on your bottom line. For instance, you can monitor your supply costs by looking for discounts and checking out alternate sources. If you discover a cheaper deal than what your current supplier offers you, you can ask them for a similar discount or switch suppliers.
You can also boost your chances of obtaining discounts by making yourself popular with other suppliers and businesses through timely bill payments. Some suppliers give discounts for early payment, which you can take advantage of to save money on your supply costs. Besides, constant late payment fees can add up to significant amounts a year, so you can also pay on time to avoid these late payment fees that will increase your supply expenses.
