Updated: Sep 5
Every business goes through leaner times when it becomes necessary to cut costs–but how do you decide what your business can do without?
If it isn’t the right time to raise prices or add new products, reducing expenses is the best way to increase your cash flow. Figuring out where to trim the fat without negatively impacting revenue or operations is challenging. Here are some simple ways to reduce business expenses without sacrificing staff, quality, or workflows.
1. Join a coworking space or go remote
Paying for an entire office space may not be economical, especially for small businesses or companies with multiple locations in different cities. Coworking space saves costs on rent, furniture, utilities, office supplies, and administrative costs. Renting an office in a shared workspace ensures a business only pays for the space it actually needs.
Companies can also save a lot of money by switching to remote work. One expert suggests that companies may save up to $11,000 per employee in overhead costs by going remote. This eliminates the need for an expensive office altogether, plus companies can save money on turnover because employees tend to stick with companies who allow them to work from home.
2. Eliminate unnecessary perks
Small business owners may feel they have to offer extravagant and creative perks to compete with large companies. However, most employees appreciate comprehensive benefits and paid time off policies more. For example, consider skipping the annual holiday party and giving everyone a small bonus instead. Companies can also make efforts to prevent workplace burnout and increase workplace happiness through non-financial perks like employee recognition, flexible schedules, and more time off. This not only reduces business expenses but is more valuable than a gym membership or free coffee.
3. Embrace automated technology
Finding ways to incorporate automation into your business can help reduce business expenses. Generative AI streamlines workflows and increases productivity by eliminating tedious manual tasks. Look into copywriting and image-generating AI tools, virtual assistants, customer service chatbots, task managers, email automation, and other technology to make the lives of your staff easier and cut costs.
4. Investigate free marketing resources
If marketing expenses are eating up your budget, consider free resources and strategies like social media marketing. Customers commonly find new products and services on platforms like Instagram and Facebook. By developing your own social media marketing strategy, you can expand your reach, grow brand awareness, and meet your customers where they are.
Analyze your current marketing strategies, such as physical ads, direct mail, PR, and sponsored content. Are there any areas that aren’t producing results or worth the investment? How can you use your budget as effectively as possible? For example, email marketing can be a more cost-effective way to stay in touch with your customers than direct mail. You can also try low-cost efforts like encouraging customers to write positive online reviews and offering loyalty programs.
5. Outsource business tasks
Outsourcing specific tasks can reduce business expenses while enabling scalability for companies. It allows you to control costs by only paying for services you need as you use them. Outsourcing can also cut back on payroll and staffing costs.
You might be a great entrepreneur, but that doesn’t mean you’re an exceptional writer, designer, or IT pro. When you outsource certain tasks, you are handing it over to an expert who can give it the attention and energy it deserves. Additionally, many technology resources can eliminate the need to pay an employee or contractor. Here are some examples:
Use Shopify to build an online store.
Research SEO keywords through a resource like AnswerThePublic.com.
Use Canva to design marketing materials, social media posts, or logos.
You can get close to professional quality at significant cost savings if you’re willing to invest a little time and money in learning a new skill.
These are just a few of the ways businesses can examine their budgets for areas to cut on business expenses and improve their bottom line.
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Independence Business Consulting understands the challenges facing small business owners when it comes to getting the capital they need. We have decades of experience consulting and securing funding for businesses, and our experts are ready to guide you through the process. Partner with us to find the best financing options for your business.