Nine ways to control business costs
Business costs matter. They matter a lot. When a business first starts, you agonise over every cent you need to invest. Put a cost control structure in place right from the start. This puts the business on solid ground for growth into the future. But, it is never too late to put cost control strategies in place.
Every business owner knows that without cost controls, money can flow out the door. Here are some ideas to help control business costs.
Create supplier competition
Let your suppliers know they are competing against each other. Be nice about it. It is surprising how fast the deals improve when they think you may go elsewhere. It never hurts to let your current supplier know you are getting prices elsewhere. It makes good business sense to compare current prices. This keeps suppliers competitive and on their toes working to keep your business.
Keep accounting practices up-to-date
It is important you can see your business finances at a glance. Having disorganised accounts leads to financial trouble. Make sure you regularly track expenditure and revenue so you do not end up overspending. Invest in some excellent software to keep your business accounts under control.
Sign short supplier contracts
Avoid signing contracts with suppliers for more than a year at a time. Signing multiyear supplier contracts may not save you money in the long term. Keep in mind. Any multiyear contract will favour the supplier not you. Schedule all recurring contracts to remind you a couple of months before they are due. This gives you time to review them and get other quotes. Even if it costs you time and paperwork, it is best to renegotiate supplier contracts every year.
Hire freelance and contract workers
There are a lot of functions in a small business that may need specialised people to complete. Things like accounting and marketing are functions you can outsource to a freelance or contract worker. They can either work based on the project or on an hourly rate. The great thing about outsourcing is it frees up your time to concentrate on other areas of the business. It also saves you paying the expenses associated with hiring staff to work on site.
Cut all unnecessary costs
Cancel all subscriptions, supplies and services not necessary for the business. When ordering business supplies, look for discounts and buy what you need without the frills. Consider changing your invoicing system to email from paper-based for those customers online. This saves the business heaps on postage, printing and mail out costs.
Address tax strategies
Review your tax strategies regularly with your financial advisor. Make good investments that return good tax savings in the future.
Cut down travel expenses
These days you do not have to travel all over the place to meet people face-to-face. You can cut these types of expenses. Substitute physical travel for online meetings an using other virtual collaborative tools. This cuts down travel costs.
Reduce energy costs
Rising costs of electricity are enough to send you out of business. But, there are things you can do to reduce costs. Create a workplace policy that all electrical devices are turned off when not in use. Run lights and air conditioners on automatic timers. Adjust thermostat settings for optimal performance. Make it everyone’s business to be energy efficient.
Lead by example
Make controlling costs a core business value. If you expect employees to believe in cost control, then you need to lead by example. Pulling into the employee parking lot driving the latest Porsche sports car can put employees offside. Especially if you expect them to be happy when the company cannot afford modest pay rises. It is your right to do with your money what you want. Keep in mind. Your employees are watching your example. Be smart about the choices you make. Consider how others perceive them.
It is simple to cut business costs. You just need to know exactly where your money goes. Once you know this, exercise discipline to help your business grow.