Being half East Indian and half Scottish means that frugality is a fairly natural state of being for me. That has certainly served me well over the years in business. In today’s market, being a successful small business owner often means that you need to be frugal, but you have to be careful not to cut where it will impact profits! You still need to be able to make money and therefore you must spend enough to keep your business sustainable and success driven.
Here are a few ways for you to cut costs around the home office.
1. Make friends. It’s true that there is strength in numbers. By partnering with other businesses, you can share costs for things like advertising, or reduce costs by buying items in bulk or sharing resources. With a bit of creativity and some dedicated relationship building , you can partner with other local businesses or with related businesses across town or even across the world.
2. Track your expenses. It’s very important to keep track of everything you are spending and profits you’re making. You can hire an accountant, or easily do this on your own by creating a spreadsheet. This way you can see exactly what you’re spending and exactly what your expenses are doing for your business.
So how does knowing what you’re spending save you money? By recording and organizing what you spend and make, you can see if what you’re spending is worth it. Say your advertising costs have gone up thirty percent, but your profits are only up ten percent. Tracking your budget will let you know this so you can cut your advertising or look for new options that will work better. Your spreadsheet will also let you know if you’re spending too much in a specific area so you can look around for cheaper options.
3. Outsourcing. Hiring other companies to work for you is a great way to save on money. When you hire employees, you have to pay for benefits, training, office space and supplies, and these expenses don’t go down if you are short on work to do. Hiring someone else to do the work may seem more expensive from the get go, but when you factor in additional costs, it’s generally no contest.
4. Shop around. When you’re in a hurry to get started on a project, or to finish it within a deadline, you might be tempted to take the first deal you see on a product. This is especially true if the price seems within your price range. But just because a price seems low doesn’t mean there aren’t better offers out there. When taking bids on a project, or looking for products and supplies to buy, always look at three different suppliers or entertain at least three bids. This will help you know if a cost is the best or not.
Just remember that low price isn’t everything; quality matters too. If the work is low quality, you may end up having to pay someone to fix it or buying a new product to replace it. If you do pass the product on to your customers, you may end up losing customers to someone else. That’s why it’s also important to track profits and expenses so you can see if cutting costs affect your overall profits.
5. Cut back. Go into your office and look in the trash can. People are throwing money away in offices across the world, big and small. Using less energy and fewer supplies is not only better for the planet, it’s also better for your budget. While it doesn’t seem like a big step, lowering the thermostat one degree or reusing printer paper for scratch paper can actually take a big dent out of your spending. Try making just a few small changes and see your spending drop.