The Covid-19 pandemic caused widespread economic damage. Although the world is slowly opening up again, small business owners are still facing a slew of new challenges. Rising inflation means that it’s more important than ever for small businesses to reduce expenses, but it’s important to do so as efficiently as possible. Reducing your monthly outgoings boosts your bottom line and makes it easier to manage your cash flow, so here are six ways to reduce your small business expenses.
1) Pay Off Debt
Of course, paying off your debts is usually easier said than done, but it really does make a big difference to your bottom line. Once your debts are paid, you will no longer be losing profits to interest.
You may want to consider debt consolidation, which is the process of combining multiple loans into one. This makes repayments easier by allowing you to focus on a single account. This is a good option for business owners who are struggling to keep track of their finances.
2) Consider Switching Banks
It never hurts to shop around. Switching banks could help you to save on credit card and banking fees, as well as benefit from rewards for opening a new account. Consider how points programmes may prove beneficial to your business by helping with costs such as travel expenses.
Automating tasks can save you significant time and boost productivity. For example, using accounting and bookkeeping software can save you from spending hours logging receipts, managing invoices and struggling with complex calculations.
4) Go Green
Reducing your energy consumption can help you to make major savings. For example, according to nonprofit energy aggregator NOPEC, switching to an LED light bulb will save businesses $200 per bulb over the course of 25,000 hours. Meanwhile, using energy efficient appliances and installing insulated blinds and windows can also cut costs without compromising on comfort. Digitizing files also helps to reduce printing costs and paper waste whilst freeing up storage space, too.
5) Remote Working
Prior to the pandemic, many businesses were afraid to let their staff work from home, fearing that it may harm productivity. However, having been forced to work remotely for over a year, it’s now clear that staff work just as hard – if not harder – from home. This means that businesses can save money on office space and utilities by allowing employees to work remotely.
Of course, you may not want your team to be 100% remote. Forbes reported that although productivity went up during the shift to work from home, innovation declined. Going forward, many companies are adopting a hybrid policy to create a healthy balance between the two. Forbes also found that companies who allowed staff to work remotely 50% of the time saved an average of $11,000 per employee over the course of one year.
When considering hiring a new employee, weigh up whether an in-house hire is really worth it or if you could benefit from outsourcing instead.
Outsourcing tasks to freelancers and contractors can save businesses a huge amount of money because you simply pay for the services you need, rather than the salary of a full-time employee. Furthermore, you don’t have the same costs associated; for example, an outsourced social media manager would have their own laptop, phone and internet connection.
Reducing business expenses doesn’t have to be a brutal process involving huge sacrifices. When done well, it’s more about trimming the fat here and there and finding new ways of working that save money without hampering productivity. With smart and creative solutions, reducing costs and boosting profits could prove easier than expected. Remember that every little helps.