Being able to adequately manage expenses can make or break a small business. Whether your business is just starting out, or is established and seeking to increase its bottom line, cutting costs without sacrificing quality is crucial. Here are some practical and actionable strategies to help make your business more efficient and profitable.
1. Purchase items in bulk. Purchasing any relevant inventory or supplies in bulk can save a significant amount of money over the course of a year. When you buy in bulk, you not only save on shipping costs, but you may be able to purchase at a discount from many suppliers.
2. Review active subscriptions. Review any services you subscribe to for your business and evaluate whether they are still necessary. These could include software licenses, productivity tools, and cloud services, among others. You might also consider shopping around for less expensive alternatives to the subscriptions you do decide to keep. Set a reminder to review your subscriptions at least twice per year.
3. Negotiate pricing with suppliers. Review prices with your suppliers to see if they might be willing to offer any type of discount. You might also consider changing suppliers if there is another company out there that carries what you need at a lower price. You should also monitor the prices of items you regularly order so you can stay on top of any price increases. If you do notice a significant price increase, reach out to your supplier to try and negotiate a lower price. If you’re unsuccessful, look for a lower-cost alternative.
4. Consider allowing remote work. If your business can support it, having some or all of your employees transition to remote work could allow you to downsize to a less expensive office, or even eliminate the need for an office altogether. While remote work isn’t feasible for all businesses, it can help save money on rent, utilities, office furniture, computer equipment, and supplies.
5. Consider outsourcing some of your operations. Look into outsourcing certain tasks, such as accounting, marketing, payroll, or HR services. It may be less expensive than hiring full-time staff. Utilizing freelancers and contractors when necessary can be a cost-efficient way to get the additional services your business needs.
6. Become more energy efficient. Improving the energy-efficiency of your business can help to lower your utility bills. You could change your office light bulbs to energy-saving versions, install programmable thermostats, or upgrade your heating and cooling equipment. If you own the building your business operates out of, you may even qualify for special financing to make qualified energy updates for your business.
7. Look for less expensive borrowing options. A business line of credit typically has a lower interest rate than a business credit card but can provide you with the same kind of rolling credit limit. You might also consider a business loan for large expenses that will take some time to pay off.
8. Review insurance policies. You might be loyal to your insurance companies, but chances are they won’t be as loyal to you when it comes to increasing prices. It’s a good idea to review each of your business insurance policies annually to ensure you’re paying only for what you need. Make some calls or inquiries to competing providers and see if they can offer you a better deal. There’s also a good chance that if you let your current insurance company know you’re shopping around, they’ll be willing to negotiate your policy price.
9. Maximize tax deductions. Tax laws change frequently, and your tax bracket and eligibility for tax credits and deductions can change along with them. For this reason, it’s important to plan throughout the year. You might also consider hiring a business accountant or tax professional if you don’t already have one, as they might be able to help your business save money in the long run.
10. Limit banking fees. Review what types of fees you’re being charged for your business banking relationship. If you’re incurring excessive fees, you might consider switching to a free business checking account, or shopping around for an account with fewer fees. A business banking professional should be able to help you better understand what type of business bank account makes the most sense for you.
Running a small business is no easy feat. However, being aware of all the things your business can do to save money will have a direct impact on your bottom line. If you are a small business owner in MA or RI looking for cost-effective business financing, banking accounts, or cash-management solutions, we’re here to help. Don’t hesitate to contact our business banking team today.