Cost-Cutting Tips for Small Companies

Whether your business is facing challenges during this tough economy or is doing just fine, the more you can trim off your business expenses, the better off you’ll be. The savings can be used to keep your business afloat, expand into new ventures, or improve your bottom line. Here are 47 cost-cutting strategies for your small company, followed by some interesting facts and statistics regarding expense-reducing methods and their impact on your bottom line and the environment.

47 ways to reduce business expenses

  1. Save on postage by delivering invoices and statements via email.
  2. Download free online forms instead of buying them at office supply stores.
  3. Offer catalogs and brochures as PDF downloads to cut printing and shipping costs.
  4. Turn down the heat or turn up the A/C to save on utility costs (you can “pre-cool” your space during the hot summer months by setting your thermostat to cooler-than-normal temps during the early part of the day, and warmer-than-normal temps during the afternoon, enabling your space to stay cooler all day and reducing energy usage by 25% to 30% during peak electrical demand times).
  5. Turn off unnecessary lights.
  6. Turn off unused office equipment after hours, on weekends, and during holidays.
  7. If you’re renting space for your business, and your lease will be up soon, check to see if you can get a better deal on rent elsewhere. If you can, see if your current landlord will lower your rent. If you do consider a move, don’t forget to factor in the cost of the move.
  8. Sublease unused space. If your lease allows it, and you’re not using all the space you are paying for, consider subleasing some of it to another business.
  9. Set your printer to draft mode to save ink.
  10. Re-fill your own printer cartridges.
  11. Switch your telephone landline to VOIP or cable to slash monthly phone bills.
  12. Use free open source or cloud-based applications.
  13. Check every invoice and verify charges before paying.
  14. Pay bills on time to avoid fees.
  15. Consider telecommuting, virtual assistants, or shared office space.
  16. Review your cellular plan usage and compare rates elsewhere before renewing.
  17. Clean your email list. If you have a large email list, purging your list of people who never open, or names that always bounce, may reduce your email service fees.
  18. DON’T cut marketing, but target your niche to get the most for your ad bucks.
  19. Cross-train your employees to help each other during crunch time instead of hiring temps.
  20. Use interns and freelancers for short-term projects.
  21. During extra hard times or if running a seasonal business, consider pausing salary raises and bonuses in order to keep your valued employees rather than having to let them go.
  22. Take advantage of discounts: 2% for paying early, discount for cash, free shipping over $50, etc.
  23. Compare vendor prices. Your current suppliers and vendors may no longer be the best-priced options. To find out, get quotes from other sources.
  24. Ask your current suppliers for a discount. If you are a long time customer, pay on time and buy enough to matter to the supplier, they may give you a break on prices – but only if you ask.
  25. Charge business expenses, inventory, and other purchases on a cash-back credit card. (Just be sure you pay the card off at the end of each month.)
  26. “Fire” customers that waste more time and money than they’re worth.
  27. Follow purchase order requirements to be sure your invoices get paid on time.
  28. Stop selling to slow-paying accounts.
  29. Concentrate on customer service to keep merchandise return rates down.
  30. Double-check addresses before shipping to avoid costly mistakes.
  31. Include promotional material in outgoing packages: coupons, newsletters, fliers.
  32. Use email and social media instead of direct mail to test new offers and coupons for your customers.
  33. Shop around for better rates on printing, shipping, and office supplies.
  34. Use free shipping materials from USPS, UPS, and FedEx.
  35. Sign up for free business directory listings online.
  36. Barter/partner for advertising (i.e. pizza delivery ads on hotel key cards).
  37. Buy used furniture and office equipment.
  38. Reduce, reuse, recycle.
  39. Share your expertise in public appearances, blogs, and social media to get free exposure.
  40. Look for online tools that offer a free basic service (i.e. Skype) with paid upgrades when you need them.
  41. Join a networking group and find a mentor with more experience to advise you.
  42. Look for rebates/incentives to replace old equipment with newer, more energy-efficient systems.
  43. When traveling, use free airport shuttles and eat lunch where there’s free Wi-Fi, but be sure to follow proper Wi-Fi safety precautions.
  44. Don’t book at a convention hotel without comparing rates with your AAA, AARP, or credit card discounts.
  45. Make more sales by meeting with clients between meals in a quiet, upscale hotel lobby.
  46. Minimize the number of trips to a client’s location. You’ll save both time and gas. 
  47. Use free teleconference services.

Why you should power down computers during off hours

The money you’ll save:

When a single computer is left in sleep mode every night and weekend for a year, it costs your business $41 per year to power that unused computer, according to Mark Pierce, a Cornell Cooperative Extension associate in the Department of Design and Environmental Analysis in Cornell’s College of Human Ecology. Compare that with the $57 per year it costs to run the computer on weekdays. If you shut down that same computer, but leave it plugged in, you’ll spend $3 per year powering the monitor’s standby mode when it’s not in use.

If saving $38 per year is not a compelling reason to shut down your computer, multiply that by the number of computers owned by your business, then multiply that number by the number of years you’ll be in business. You’ll find the long-term cost savings justifies the small effort it takes to shut down your computer.

The environmental impact:

Most of the electricity in the US is generated from coal-fueled power plants. The more electricity we use, the more coal needs to be mined. That can strip landscapes of their natural beauty and kill off species that once lived in the mined area. Reducing electricity usage can decrease the amount of coal mined for power and preserve landscapes and ecosystems.

Why you should turn off lights when not in use

The money you’ll save:

The cost of a kilowatt hour of energy varies by region, so you’ll need to take a look at your electric bill to determine how much money this tip will save you. But here is an example based on averages.

Let’s use the example of a 60 watt bulb that is typically left on overnight at the office (5pm-8am).

One kilowatt hour is the energy it takes to power 1,000 watts for an hour. Find out how many hours it takes for that light bulb to use one kilowatt hour of electricity by dividing 1,000 by 60. It takes about 17 hours.

Let’s say the electric company charges $0.10 per kilowatt hour, and there are 15 hours of the day when the office is unoccupied. Leaving the light on overnight is using about one kilowatt hour of unnecessary power per day.

Here’s how much you can save per light bulb by turning off the lights overnight Monday through Friday:

  • 1 week: $0.50
  • 1 month: $2
  • 1 year: $24

Count how many light bulbs are in your office, then multiply that number by each of the numbers above to figure out your individual savings. Also consider that your light bulbs will last longer, so you can cut the cost of buying replacements as well.

The environmental impact:

Earlier, we mentioned the toll mining coal to fuel electrical power plants takes on the environment. By using less electricity, you are lowering the demand for coal and decreasing the amount of environmental destruction caused by mining.

Also, consider that some light bulbs contain mercury, which is toxic and can damage the environment. By turning off your lights at night, you’ll use fewer light bulbs, and that’s less mercury going into the landfill.

The benefits of printing on both sides of the paper

The money you’ll save:

If you’re not currently printing documents on both sides of the paper, you can cut your paper consumption in half by changing your default printer settings to print two-sided documents. Using less paper means less of your budget is devoted to office supplies, and you can use that money to grow your business in other ways.

The environmental impact:

In addition to the destruction of wildlife habitat caused by deforestation, the paper making process involves nearly 1,000 different chemicals and uses thousands of kilowatt hours of energy. Cutting your paper consumption (and encouraging others to do so) can eliminate some of the demand that drives environmental damage.

Why you should think before you print

The money you’ll save:

Combine printing on both sides of the paper with thinking before you print, and you can cut your paper consumption by more than half! Years ago, the digital revolution promised a “paperless office.” But paper consumption actually increased after the advent of email by most estimates. Consider storing your documents digitally rather than keeping paper files, and only print email messages if absolutely necessary.

By printing fewer documents and email messages, you not only save money on paper, you buy fewer ink cartridges and less toner and consume less power. The savings can really add up over the course of a year.

The environmental impact:

We discussed the environmental impact of power and paper consumption already, so let’s take a look at ink cartridges. Made of plastic and heavily packaged in cardboard, these cartridges create a lot of waste that can be recycled. Many manufacturers will take their old ink cartridges back and reuse them to make new ink cartridges. If your local office supply store or ink brand accepts used cartridges, never throw them away. Plastic takes a long time to biodegrade in a landfill.

Another common way to help the environment is to add a notice to your email signature asking the recipient not to print your message. By spreading the word, you’re helping the environment even more.

How digital faxing saves money and helps the environment

The money you’ll save:

The financial breakdown on how much money you can save through digital faxing is almost identical to printing less. However, digital faxing also saves you the cost of buying, maintaining, and repairing a fax machine. Faxing documents over email lets you use the equipment you already own (a computer with an Internet connection) to send and receive faxes.

The environmental impact:

Using your email rather than a fax machine is another way to cut your paper consumption. Most digital faxing plans allow you to archive your incoming and outgoing documents, so you never need to print them, and they’re always accessible to you.

Make sure you’re getting paid by customers

Finally, as much as these cost-cutting measures can help, they ultimately won’t be enough if your customers aren’t paying. Our ZenBusiness Money app makes it fast and simple for small business owners to get paid. You can use it to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard.

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