5 essential cost cutting business tips
August 30, 2019
Starting your own business can seem like a daunting task. There are so many things to do: writing a business proposal, looking for business plan samples, choosing the best small business health insurance, and going through endless applications for small business start up loans.
And that’s just the tip of the iceberg.
Significant costs are another typical issue. And unfortunately, excessive amounts of money are not what business entrepreneurs are usually known for. But keeping a strong business cash flow is one of the most important (and most difficult) tasks of any new business.
However, don’t let the long to-do list and mounting costs deter you from becoming a successful business owner. Here are five easy ways to save money and keep track of your to-do list right from the start.
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Starting a new business doesn’t necessarily mean you’ll have to rent office space right away. Depending on the nature of your products or services, you may consider starting out as a home based business.
Setting up shop in your spare room may not be as glamorous as renting a shiny office in that new office building downtown, but it definitely has its perks. You can save money on commuting, rent, overhead costs, and even cash in on attractive tax deductions offered for home businesses.
If the nature of your work allows it, you can create a mobile business. Certain services, like home improvement work, plumbing, or landscaping definitely require you to perform your tasks at your customers’ chosen location. Even if you run a tech consulting company, you can offer set-up and training for your business-to-business customers at their own offices.
But if you absolutely have to have an office, choose wisely. Renting a cheap, run-down space in the bad part of town can be just as damaging for your small business as spending all your money on a shiny, hip new office. Consider a coworking space, sharing an office with another business, and lower your square feet requirement with handy space-maximizing tricks.
Paying salaries to people who work for you constitutes a huge chunk of your small business’ budget. The salaries are just one thing; on top of those come social security, medicare costs, unemployment taxes, and so on.
On the other hand, if you employ independent contractors, you only have to pay their fees. It saves your business considerable amounts of money and headaches when it comes to filing your tax forms.
An added bonus of hiring contractors is the flexibility. With employees, you have to pay the same amount each month, regardless of the actual work they did for you. This is generally fine if the workload is pretty consistent. But what if there’s tons of work one week and virtually nothing the next? Do you want to pay people hanging around the office checking their social feeds and reading business news all day?
With contractors, you can arrange the hours, availability, and job requirements for each worker individually. This gives you a flexible, agile workforce tailor-made to your ever changing needs. If your business allows it, you can even consider outsourcing work overseas. Saving costs and access to a wider talent pool are just two of the many perks that come with it.
Equipment and procedures
When starting your own business, you may need to purchase equipment. Try to keep this to a minimum. Even though buying office furniture and whatever equipment your business needs seems inevitable, a surprising amount of it can be avoided.
For example, if you work from home, you don’t really need any new furniture. Just plug-in your laptop at the kitchen table and get started.
If some kind of equipment is necessary for your business (e.g. a professional lawn-mower for a landscaping service), consider leasing it instead of buying. This trick saves you money, and gives you the chance to continuously upgrade your equipment to the newest models once your lease is up.
But it’s not only the physical equipment that can drain money from your accounts. Business software, small business banking, credit cards, and all other procedures have to be optimized to your needs and as cost-effective as possible.
For example, don’t be tempted by flashy new software with lots of unnecessary features. Choose small business accounting software that perfectly matches your needs. Similarly, picking a great payments provider like Veem will help you shave valuable money off each of your domestic and international payments.
Simplify your business payments with Veem.
Marketing is one of the trickiest aspects when starting out. If not done well, funds spent on small business marketing can quickly become money down the toilet. That’s right: no ad will generate revenue if it misses its target audience.
You have to be extremely familiar with your target market’s defining features and preferences. Luckily, once you’ve done your homework, you have a large array of marketing tools at your fingertips to help reach your target market. And the best thing: most of them are on the cheap side, or even free.
Create a simple, elegant, and eye-catching business website. Use SEO to optimize your business site for the relevant keywords your target market types into their search engines. Since SEO takes a while to produce results, you may consider investing in paid search engine ads to boost your profile.
Use content marketing to your advantage. Start a blog and write about topics that interest your target audience: business articles about current events, small business ideas, or even your take on how to start a business.
Create social media profiles on your target market’s preferred platforms and connect with your audience. Share your blog posts, advertise any special events, sales, or discounts, and get to know your target market even better. If you want to elevate your profile and reach a larger audience, consider working with an influencer.
Last but not least, email marketing is a highly cost-effective and successful way to get in touch with your target audience. Build an email list and check in regularly with your customers to keep your brand at the forefront of their minds.
Despite the costs, taking out insurance is a must for many businesses. If your startup falls into this category, don’t go for the first insurance company that pops up in your Google search. Instead, take your time and read through all offers, including the fine print.
Ask other business owners about their insurance companies and policies. You can even turn to an insurance broker to ask for help and guidance.
Don’t be afraid to negotiate rates. There are several ways you can reduce the costs of your insurance policy, even after you’ve signed the contract. Many business owners assess and review their policy annually. Make sure your contract includes this option and don’t hesitate to ask for a better rate, should the original circumstances change.
Starting a small business costs a lot of time and money. However, don’t let this deter you from following your dreams. With some effort, you can significantly reduce your costs and save money for what really matters: growing your business.