If you need to start tightening the belt on your business expenses, you’re probably already aware that it’s sometimes easier said than done. After all, do you really want to start doing something drastic like lay off employees? Of course not, but your business may not survive unless you do something radical.
Before you get desperate, however, you can start saving cash each and every month by following the tips below.
1. Ask for Help From People You Already Know
Go through your contacts, and reach out to the people who may be able to lend a hand for a time. Maybe it’s an old professor who can provide some business advice or suggest a student who could be an intern. Perhaps your cousin is a lawyer and could provide a bit of legal advice. Better yet, your contacts could refer your business to prospects.
2. Create Strategic Partnerships
Let’s say that you sell organic coffee. Are there local restaurants that would sell your product? This gives you a chance to introduce your product to a new market for practically nothing. You could even team up with related businesses—or even your neighbors if you have a physical location—to share everything from mailing lists to suppliers to marketing techniques, such as a coordinated sale on the first Saturday of every month.
3. Outsource, Outsource, Outsource
While you obviously need employees to keep your business running, you don’t necessarily have to hire full-time employees. If you can keep your staff to a minimum, you may be able to outsource the rest of the workload to freelancers or independent contractors. Websites like Upwork, Elance and SolutionInn.com are great places to start.
4. Renegotiate With the Landlord
This will probably be no easy task. But what if your lease is up for renewal, and your landlord doesn’t have any other tenants lined up? You may be able to get a better deal.
If you have a long-term lease, it wouldn’t hurt to sit down with your landlord and open up the books. If he or she realizes that you may be in financial danger, they may be willing to renegotiate the lease with you.
5. Use Free Software
In this day and age, there is more than enough free software to handle most of your business needs. For example, instead of paying for Microsoft Office, use free alternatives like Google Docs or Apache OpenOffice. If you visit CNET’s Download.com, you’ll be able to download a wide range of free software, from antivirus to project-management tools.
6. Go Green
This isn’t just a wise PR move, as going green can actually save your bank account as well as the environment. You could start by doing simple things, such as unplugging devices when not in use to cut down electricity bills. You could also reduce paper and postage costs by sending your invoice online through services like Due.com or via QuickBooks’ integrated invoicing process.
7. Lease Equipment
Did you know that most small businesses don’t actually purchase equipment? Instead, they lease the essential equipment they need in order to preserve cash. You can obtain an equipment-lease loan through National Funding or other small business lenders.
8. Sublet Unused Space
If you have extra office space, you could consider subletting it. Instead of this area going to waste, you could make some extra cash off of it. Just remember that subleasing can be a bit tricky, so make sure the space is suitable to rent out and that subleasing is not against your own lease agreement.
9. Consider Co-Working Spaces
What if you’re just starting out and don’t have the funds to rent your own office? Consider renting out a shared workspace for either day-to-day operations or when you need to have a meeting with a prospective client through sites PivotDesk or ShareDesk. I’ve used both of these services when trying to conserve cash when money was tight with my business.
10. Hire Smart Yet Inexperienced People
While experience can be beneficial, a developer with twenty years of experience is going to cost a whole lot more than a recent graduate. Besides getting a talented individual at an entry-level salary, your recent grad may be knowledgeable with recent technology and techniques.
One of my best employees ever was a student. I found him at a startup event and was amazed at what he knew. I ended up hiring him for $1000/month. He was more productive than several other people on my team. Find this hidden talent.
11. Reduce the Workweek
Before cutting employee expenses or perks or even laying them off, consider reducing the workweek. A four-day week could give your business savings of 20%. For example, instead of giving an employee a raise, you could give him or her more time off. Furthermore, shortened workweeks are better for employee wellbeing, which could translate to fewer sick days.
12. Collect Cash in Advance
If you’re extending credit to customers, then you may want to consider collecting a percentage of cash up front. By doing so, you’ll improve cash flow, reduce risk and save money by not having to go after a delinquent customer through collections.
13. Require a Deposit on Large or Custom Orders
Speaking of reducing risk, you should also require a deposit on any large or custom orders. A custom order, for example, has a very limited value. So what will you do if the client backs out of the deal? A deposit could at least soften the blow during the unthinkable.
14. Limit Inventory and Supplies
While buying in bulk can be one way to reduce spending, it can also have a dark side. After all, do you really need to have a supplier dropping off a case of paper towels each month? Probably not. Instead, stick with the essentials.
As for inventory, if you manufacture 200 items of your product, but only need 50 to keep the lights on, then only produce those 50 varieties.
15. Join a Trade Association
Sure, you may have to pay a membership fee, but trade associations usually have great discounts on necessities like insurance. Other perks include discounts on travel and car rental. You can find a list of trade associations at USA.gov.
16. Offer a Discount for a Speedy Payment
If you want to collect the money owed to you as quickly as possible, then implement a discount for customers who pay ahead of time. For example, offer a 3% discount if they pay in-full within the first two weeks.
17. Ask Suppliers for a Discount
It wouldn’t hurt to ask your suppliers if they can provide you with a discount. After all, they probably want to keep your business, so they may be a little flexible in negotiating terms like a percentage off products or an interest-free loan.
18. Avoid Discretionary Spending
One of the easiest ways to save money each month is by simply trimming the fat. For example, do you really need a daily cleaning service? Can you hold off on painting the office? Is it necessary to hire a new employee or keep 20 people on payroll when you can get by with 17?
19. Think Outside the Box With Advertising
Marketing your business can take up more time and resources than you are aware. That’s why you should come up with clever ways to communicate with your market. For example, you could send customers a coupon with every purchase, which will also cut costs on postage. You could do a little guerrilla marketing as well.
20. Switch Banks or Credit-Card Processing Service
You may be getting hit with high ATM surcharges, interest rates or paying way too much for credit-card processing. Take the time to find out which banks and processors offer the best deals available.
Why not exchange your goods or services for another business’s goods or services. For example, let’s say you’re a web designer. You could build and maintain the website of a local pizzeria in exchange for free lunches on Fridays. You can also join a barter organization like the National Association of Trade Exchanges.
22. Don’t Overlook Tax Deductions
Did you know that driving to a client’s office or conducting meetings in a restaurant can be tax-deductible? Even if you work from home, there could be some tax deduction waiting for you. In short, there are plenty of tax deductions available for your business. Make sure that you don’t overlook them.
23. Look Into Bundled Services
Telecommunication companies bundle internet, cable and phone together, which could end up saving a little bit of money every month. Insurance companies also offer bundled plans. In other words, if a company provides multiple services, you may be able to get them bundled for a discounted monthly fee.
24. Keep Business Meetings Sparse
While meetings are essential for keeping employees in the loop and wooing prospective clients, they can get pricey. If you have an on-site meeting, make sure that you have only the essential team members involved. If the entire team is attending the meeting, then there isn’t anyone producing new work. You can also use virtual meetings or conferences like Google Hangouts, Skype, GoToMeeting or Speek to help cut travel costs.
25. Shop Around
Don’t settle on the first bid or quote that you receive. Do a little more research, and find the best deal available. After finding a deal on whatever you need, if you were to quote that price, a supplier or vendor will most likely match it.
For more ways to save money in your company, check out our article on eight ways to bootstrap your business.