Saving money is critical for the survival of your business, especially during tough economic times.
While most entrepreneurs focus on increasing sales, lowering expenses is equally important to achieve or maintain profitability.
These tips will help you cut costs while still reaching your business goals and targets.
Regularly review your budget
While many businesses have annual or quarterly budget meetings, your budget shouldn’t be stagnant. You should be managing and revising your budget in real time. By staying on top of your finances, you reduce the risk of falling behind on payments or finding yourself in an unfavourable economic situation.
Cloud accounting software, such as Xero, has made it possible for business owners to access information in real-time, anywhere and on almost any device. At any given time, business owners have a clear view of their financial situation and can make informed decisions using accurate and relevant information.
NOTE: It’s in your company’s best interests to have an experienced accountant handling your accounting, tax and payroll.
Like reducing utilities, such energy and water usage, cutting down paper waste is good for your company as well as for the environment.
Software can create infinite amounts of digital documents with minimal cost. Spend time on digitising some processes to reduce paper consumption or even go completely paperless.
If it’s not possible for your business to go 100% paperless, reducing paper consumption still means fewer paper purchases, lower storage costs, and greater efficiency.
Explore alternative advertising
It’s expensive to run advertisements on TV and in print.
Thanks to internet, digital and social media marketing and advertising, it's possible to cut traditional advertising costs and still reach customers.
If you have a satisfied customer, ask them to recommend your business to people in their community, family or circle of friends - word-of-mouth marketing is free! To get the most out of word-of-mouth marketing, make it easy for customers to review and share how much they love your product.
You can also offer expert advice - teaching a class, speaking at a community meeting, or writing an article for a local newspaper will make you look like an expert and will garner low-cost attention for your business.
Outsource where possible
Employees are essential to any small business, but employee costs— such as salaries, office space and employee benefits — can be very costly.
Consider which employees/positions are critically important to keep on full-time and outsource work to independent contractors where possible. Freelancers are a great way to have a flexible workforce because there is no ongoing cost (like with employees) and they only work when there is work to do.
Accounting, tax and payroll services, graphic design and social media as well as marketing and public relations services are often outsourced.
Set up an online store
Often, an online business presence is more affordable than a physical business presence.
Osidon CEO Hennie Ferreira recently spoke to The Citizen about the benefits of doing business online.
Use free software
Use software products for free through trial downloads, freeware and limited versions of the full product. Before you spend hundreds on software purchases or updates, look into free open source alternatives.
Furthermore, using cloud-based software will save you the cost of expensive hardware and storage space.
Telecommute when possible
Reduce business costs by operating virtually whenever possible. Virtual meetings on Skype, Zoom, Teams or Workplace help minimise travel expenses and reduce time lost due to commuting. Virtual offices can eliminate also the need for physical space.
Furthermore, technologies such as Google Drive, Dropbox or Workplace centralise company documents so all employees have easy access to the necessary documents and files.
Use space more efficiently or work remotely
Running your small business/entrepreneurial venture from home, with employees operating remotely, is a cheaper alternative to renting large and expensive spaces.
If you aren’t able to work from home, look into the efficient use of office space (collaborative workstations and multipurpose rooms), temporary spaces (co-working space) or even renting carts or kiosks.
By trying various options, you can find what works for your business without signing extended lease agreements.
If you are office-based, make sure you encourage energy efficiency to reduce your overhead costs.
Cutting costs is an important part of running an effective business. Be savvy and use our tips to cut costs and help grow your business.