Every penny counts to small businesses, so paying too much for the things your business needs just isn’t an option. Here are eight ways you can save money on everyday business expenses.
You’re a small business. You probably don’t have the money-is-no-object budget of big businesses when it comes to every day expenses. In fact, you’re probably trying to pinch pennies while providing your employees the tools they need to do their best work. So how do other business owners save money on—well—everything? Here are a few ideas.
Don’t Hire. Contract!
Gone are the days where you have to bring on a part-time “employee.” Employees need an office and/or equipment, you’re on the hook for a portion of their taxes and insurances, and you have to invest a considerable amount into training.
Instead, hire a contractor or freelancer. They’ll require some training but outside of that, all you pay them is the cost of the job. No taxes, no worker’s comp. insurance—just a fair wage for outstanding work.
But be careful. The IRS has very strict rules when hiring a contractor. For the most part, you can’t have any control over their schedule, you can’t act as their manager, and you shouldn’t provide them with any type of company uniform, among others. If you break the rules, they’re an employee. If you’re not sure, use IRS form SS-8 to figure it out.
Cut the Office Supplies
Nobody is saying not to provide paper for the copier but if you’re still following the old playbook of stocking your closets with binder clips, post-it notes, and boxes of pens, there’s probably not a need. Technology has made offices much more paperless. Those to-do lists that were once kept on post-it notes can now be saved on an app. Filing cabinets have been replaced with Dropbox and Google Drive, and there’s no need to print everything out.
You also don’t need swanky, high-end desks. If you have an IKEA close by, head there and buy desks on the cheap.
Teleconference your Meetings
Is it essential that you’re all in the same room to hold a meeting? How about a teleconference? There are plenty of conferencing platforms on the market and some are pretty expensive but if you only have a few people in the meeting, consider Google Hangouts. For meetings of 10 or less, all your people need is an Internet connection. It’s completely free and easy to use.
If you need a more robust platform, platforms like GoToMeeting will cost $50 per month for up to 100 people but that’s still cheaper than flying people to one location.
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Speaking of Technology
First, Internet. Depending on your type of business, you may not need business-class service. If you have a lot of employees or they’re doing high-end computing tasks that actually require a robust service, then business-class speed is a necessity. But if you only have a couple of employees and they’re performing basic computing tasks, you can probably get by with a slower speed at a lower price. Don’t buy more than what you need.
Second, no need to upgrade your equipment every time something new comes out. Purchase every other software update instead of each one unless there are large amounts of security updates. No need to buy the newest iGadget either. On the other hand, don’t be cheap. New features and faster, more efficient hardware could be a cost saver. Buy and update, skip an update, buy an update—that makes for a reasonable upgrade cycle.
Don’t be Too Loyal
In business, loyalty to vendors can be a plus but don’t be too loyal. That insurance agent you play golf with might not have the lowest rate. The vendor you’ve done business with for decades may not be the best deal. At least once per year, compare prices and don’t be afraid to do some haggling. Loyalty means giving your current vendors the opportunity to match prices. It doesn’t mean paying more for the same product.
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Stop Paying Finance Charges
There’s no way around it—if you’re paying finance charges, late fees, or bank charges, you are throwing away money unnecessarily. If you’re paying annual fees on a credit card, unused gym membership fees, and strange fees from a vendor, it’s time to cut these out. Every business ends up having a bit of money bleed. Audit your books regularly. Ask questions about every charge, regardless of how small it is, and refuse to pay unnecessary fees. You can’t avoid taxes but fees are negotiable.
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Advertising takes a lot of time and research to get right. That doesn’t mean you should pay for a mailing and hope it works. Online advertising gives you more control over the audience that will see your ad and you can spend as little as a few dollars each day if you want to. Carefully measure your advertising efforts and use the platform that converts the most people.
Partner with Other Businesses
Businesses are finding creative ways to cut expenses by sharing. Businesses sometimes rent a large office space and move in together. They can then share Internet service, other utilities, and office equipment. Companies like Uber have made “sharing economy” a household term. There’s no reason your business can’t take advantage of it too.
Just like at home, a little bit of digging will probably reveal ways to keep more money in your bank accounts. That’s just as important as gaining more customers.