When you’re making lots of money, acquiring everything last your business needs – or may need – might seem like a good idea. But what if sales slow down and your cash starts to run out? Instead of waiting for an economic downturn to figure out how to keep your business afloat, learning how and where to cut costs now can help you thrive in good times and bad.
Pay for Software Subscriptions
You could be parting with significant amounts of money if you’re still buying software on disk or downloading packages for individual computers. To spend less money, you might consider software subscriptions. Here’s how they work – to use a vendor’s software, for example QuickBooks software, all you do is open an account on their website, pay a very low monthly or annual subscription fee, and set up a username and password. You can use all the features the software has to offer online without paying someone to install and maintain it on your computers. Your work and data gets saved securely online, and you can access the software from any computing device, anywhere in the world, any time of the day or night.
Software on a subscription basis for single and multiple users in your business is available for a wide range of tasks including word processing, accounting, team management, graphic design, and even video editing.
Embrace the Sharing Economy
Business furniture and some equipment lose their value once you buy them. And, it becomes challenging to recover the money you spent once the items become outdated. Enter the sharing economy: Popular businesses that have excelled in the sharing economy include Airbnb and Uber. In the case of Airbnb, travellers pay a fraction of the cost of a hotel stay to share a room in someone’s home. Riders pay significantly less than the cost of owning a car to catch a ride through the Uber app.
Consider contacting businesses and individuals in your city doing business in the shared economy. You can rent everything from vehicles to laptops for significantly less than it would cost to buy and maintain them. Renting instead of buying is a highly effective way to bank instead of spend your earnings.
Look for Better Lease Terms
If you don’t own the premises, leasing business space is probably your biggest expense. A few approaches to cutting costs include:
- Renegotiating your lease terms. Your landlord might accept a lower payment depending on how the economy is doing.
- If the building is a good location, leasing a smaller space within the building can lower your business expenses.
- Moving to a cheaper location.
- For a small team, operating out of a co-working space with affordable day, weekly, and monthly fees.
Rethink Personnel Needs
As your business needs evolve, hiring additional personnel isn’t always the best action to take. If you’re looking to save on hiring and training costs, you might take a look at your existing workforce instead. If your workforce consists of millennial-age workers, you might find them eager to take on additional responsibilities when it makes their job more interesting and helps them learn new skills. You want to avoid overworking your team just to save money, but if you have existing employees up for a new challenge, why not let them run with it?
Getting in the habit of spending less on your business shouldn’t be just about saving for when times get tough. Being strategically frugal — without sacrificing quality — makes it possible to amass the cash you need to make game-changing investments in your business.