Tips for Controlling Your Business Costs and Saving Money
While running a business the peak concern of business owners is controlling the cash flow. Businesses are just like any standard budget.
You must make more at your business then you spend.
How can you go about this?
Well, you could always put out a cheap product and be the only employee, but then you wouldn’t have a business to run for very long.
It’s a fine line on how to cut business costs to save money and how to just slash your budget and ruin your business model. How should you handle business cost management?
Technology Can Save
Technology is a life saver for a lot of people. This is especially helpful for people who are hesitant to grown their employment numbers.
Technology can be very cost effective when it comes to business cost management. Automatic invoicing in the cloud, project management, and payment acceptance.
A lot of the tech products are offered on a free trial by their production companies to ensure that people get the best for their money.
When you hear about the $15/hr pay that Seattle enacted you wonder how they saved on business costs in the city. They decided to install payment centers in numerous McDonald’s to slash costs.
Use technology. Don’t be afraid of it.
Freelance/Contract, Not Permanent
Having a permanent employee can be expensive. It’s very expensive if you are able to offer benefits. Taxes, healthcare, uniforms, training, etc.
These things truly pile up in the cost department. Business cost management dictates that if you’re going to make a permanent hire, you don’t spend all of that money in one lump sum.
Numerous companies have a probationary period of at least 90 days before benefits begin. Freelance and contract employees are the way to go if you can’t afford to offer those benefits.
Even if you don’t want to offer those things contract employees can be the answer.
Most freelance/contract employees will ask for more money because they’re not getting benefits, but ultimately overtime you will save money.
It’s also much cheaper if you have to end up firing the person.
Communication Costs Can Hurt
There are four big cellular companies that cost a good bit of money for communication.
Then you have landlines which haven’t gotten much cheaper because they are predominantly used for businesses now instead of residential.
Business cost management can be difficult when it comes to business expenditures.
Whether it’s just you or you have multiple employees you can save money on communications. Skype, Google Chat, and other free services will cut communication bills by a lot.
Replace The Dead Weight
When your employees become dead-weight, cut them. Employees can become quite stagnant after a while. Especially when they don’t believe in the vision of your company.
Take a look at the revenue per employee and determine who is not worth the money you’re having to spend on them.
If you have employees doing the bare minimum they are going to make your company look like it is doing the bare minimum to serve your customer base.
Take your bottom 10-15 percent of performers and replace them with people that show they can match with the top of your revenue per employee producers.
Renegotiate Vendor Contracts
Vendors are a lot like bills. They tend to slowly elevate costs as time goes on.
They use excuses about increase in costs of production or they try to say the price was only good for a small window of time. Do not let vendor contracts go longer than a year.
Renegotiate vendor contracts every year at the very minimum. This ensures that you can discuss terms and costs frequently.
Vendors who don’t meet your needs while the contract is active can be easily replaces by a cheaper and more efficient alternative.
Be Your Only Employee As Long As Possible
This one is simple. When you’re running a small business you can tend to feel overwhelmed and then you decide that it’s time to hire.
Not so fast.
If you don’t want to be a giant corporation then you can consider being a small business for a long time. Small business start out being run by self-employed owners.
You need to decide whether you want to entrust other employees with your vision for your business or you want to be the only one responsible for your business being effective.
When you’re not having to pay anyone, your business cost are as low as possible.
Limit Equipment And Supplies
Equipment and supplies are expensive. The problem for a lot of business is their costs are so tied up in the purchasing aspect, they bleed money.
Sure, you want quality equipment, but you don’t want to overspend on something that is maybe a couple percentage points more effective than a much cheaper alternative.
Remember that the supplies you purchase are going to be turned into whatever good or service you’re offering.
If you’re giving the customer a great experience, your cheaper alternative supplies aren’t going to hurt the outlook on your product.
Don’t buy 24K gold toilet paper when you can get off-brand from any generic store.
Work From Home Or Share
Most self-run businesses can fit in a home. Working on a computer, out of a garage, or out of the backyard.
They are all very easily done at home.
This saves you on rent and electricity for your business because you’re already paying that for your place. Another alternative is to share a store front or office.
Numerous store fronts and offices are split. You will see a 231A and a 231B storefront which splits up the store into two smaller stores. This helps cut the costs virtually in half.
Business Cost Management Is Simple
It is very simple. Calculator business costs are controllable to a point, but if you want to run a business, you have to spend money.
Remember that cutting costs is important but producing a good product and service is better and makes you irreplaceable.