Every small business has a number of necessary expenses. This is to be expected, of course. You have to keep your lights on, purchase inventory, and pay your employees – among many other things. Chances are, however, that you’re spending too much in one or more of these areas. Cutting back a bit could likely save your business hundreds, if not thousands, per year. The challenge is knowing where and how to cut back without sacrificing quality or customer service.
We’ve got some tips.
Talk to your employees. Make your employees aware that every action they take at your small business has an impact on the overall expenses of the company. Every employee wants to see the company they work for succeed, so empower them with the skills they need to cut their own costs and make better decisions.
Measure, measure, measure. You can’t control what you don’t measure and you won’t even begin to understand what you’re spending until you’re tracking it. If you don’t have a basic accounting software, now is the time to invest in one. Once you know what you’re spending in all areas of your business, you’ll know what areas you can cut.
Take advantage of discounts where you can. If you know you’re going to need 1000 boxes of widgets this year and your widget dealer offers a hefty discount after every 500 boxes purchased, don’t just purchase your usual 100 boxes at a time. Consider taking out a working capital loan* to help you get all 1000 boxes at once. Not only will you snag those big discounts, you’ll likely be able to turn over your widget inventory faster and turn a profit that will far exceed the cost of your loan.
Of course, there are dozens of other ways to trim the fat at your small business. The key is understanding the intricacies of your own unique business and how each cost is in line with your overall business strategy.
How do you cut costs at your small business?
Direct Capital is a leading nationwide provider of equipment leasing, business loans, and working capital.
*Working capital not available in the following states: AK, DE, ND, VT