5 Things Small Businesses Should Spend Less On
As many small business owners know, managing expenses and maintaining a positive cash flow is very challenging. As such, it’s always a good idea to periodically evaluate what you spend your money on and figure out how you can spend as little as possible. There are many ways to do this, but a good place to start is to determine whether you are spending on anything unnecessary. Here is a list of 5 key places to cut:
1 – Excess Spending
Take a long, hard look at what spending is and is not absolutely essential to your company. If an expense is vital to your company’s immediate growth, such as online accounting software to help you manage your sales and expenses, put it in the “priority expense” category. If it is something that will make a difference to your business in the long run, but is not immediately necessary, call it a “future necessary expense.” If it is not essential, but something that would be nice to have, such as upgraded office equipment, categorize it as a “future wishlist expense.” Assign timing to each initiative, so you feel like you have a spending plan and everything you want to buy is captured in one place.
2 – Excess Staff
Make sure you are employing only essential staff, especially when you are just starting out. Rather than hiring full-time employees, hire part-time personnel seasonally when you expect an increase in sales. Freelance employees tend to cost less than full-time employees and are used only as much as you need them. Encourage telecommuting for all staff members, freelance or otherwise, so you don’t have to rent office space. Using collaborative programs, like Google Docs and Dropbox, makes it easier than ever for employees to work together from different locations.
3 – Supplier Costs
Let your suppliers know you will be regularly evaluating your costs. The hope is that they will work hard to give you the best prices if they know you aren’t complacent. Look at large discount stores and other resources to research costs and don’t be afraid to tell your suppliers if you find a better price.
4 – Advertising
Advertising is always worth spending money on, but it can be very costly. There are less expensive alternatives you might want to consider as a supplement to traditional media. Word-of-mouth is a business’s most effective form of advertising. To capitalize on this, build an email database of current consumers and communicate with them regularly. Offer them discounts for referrals and at different times of the year. Maximize your social media presence, which costs nothing and is a powerful form of outreach and a successful way to generate excitement. You might also want to initiate a brand ambassador program whereby consumers share your products with their social media circles. The more you can implement these programs yourself, the better. Hiring outside media companies can be pricey.
5 – Late Invoices
Take advantage of any discounts that might be offered by your vendors when you pay your bills early. If those discounts aren’t in place, suggest them. And if you are having trouble getting your clients to pay you in a timely manner, initiate your own discount program. Another option is to apply for accounts receivable or supply chain financing. ExpoCredit offers both of these programs, which turn your slow moving invoices into cash, so you don’t have to wait to get paid. Visit https://www.expocredit.com/#grow to find out more.