In any economy—good or bad—one of the smartest moves small-business owners can make is to constantly monitor expenses and figure out new ways to lower them. To help you out, here are some of the best ways to cut spending while still investing in your company’s success.
Travel Light
With ever-rising airfares and hotel rates, business travel quickly eats up cash. Cut costs by avoiding business travel when possible. Instead, use videoconferencing or conference-call technology to virtually meet with your prospects, customers and partners.
•Want a traditional conference call setup? VTech Conference Phones eliminate background noise on conference calls; wireless microphones allow participants to move around the room and still be clearly heard.
•Conduct conference calls with any landline or mobile phone using AT Conference. There are various levels of service, including conference calling, web-based conferencing and operator-assisted conferencing. You can pay per month or pay-as-you-go only for minutes used.
•Don’t need phones and just want a web-based conference-call solution? Join.me offers conference calling and screen sharing. The basic plan is free, or you can get additional features such as recording, meeting tools and a meeting scheduler for a fee.
Of course, sometimes business travel is a necessity. When you have to go, save money by joining travel rewards programs. (They’re free to join, so why not sign up for all of them?) Southwest Airlines, United and JetBlue had the top-rated airline rewards programs this year, according to U.S. News & World Report. Among hotels, rewards programs from Marriott, Best Western and InterContinental Hotel Group received top honors.
Travel rewards programs generally offer the most benefits when you stick to the same airlines and hotels, and when you book directly with the airline or hotel instead of through a travel website. If your business travel needs don’t allow for this—for example, if you regularly travel all over the world and have to use a variety of different airlines, or if you stay in cities with a limited selection of hotels—save money and time by using online travel tools to find the lowest rates for your next business trip.
• Kayak.com saves you time by comparing the best deals from hundreds of travel websites on cars, flights, hotels and more.
• Traveling unexpectedly? Although it’s primarily focused on leisure travel, Expedia.com is a good place to find last-minute deals on hotel stays and airline flights.
Independent Thought
You may not think of them as an expense, but employees and their associated costs are the biggest spending category for most small-business owners.
If it’s feasible for your business, consider outsourcing some tasks to independent contractors. The costs of employee benefits such as health insurance can add about 30 percent to an employee’s annual salary or wages, but independent contractors don’t receive benefits, which can save you a lot of money right off the bat. (Talk to your accountant first to make sure the people you’re planning to hire as independent contractors aren’t defined as employees by the Internal Revenue Service. Otherwise you could face hefty fines at tax time.)
Upwork.com, Guru.com and Elance.com are three popular sites for finding independent contractors and freelancers. All three let you list jobs or projects and hire independent contractors in a wide range of industries, including IT, marketing and sales, administrative, graphic design and more. The sites simplify matters further by providing tools enabling you to collaborate with your contractors, manage projects and track time worked. Finally, each site offers secure payment options and acts as an intermediary for payments; you pay only when satisfied with the work that was done.
Do you have workers in multiple locations or employees who travel a lot for business? Petty cash isn’t the only solution when employees need to make purchases without your approval. Keep employees’ spending under control using a prepaid business credit card such as the PEX Card, which allows you to give employees a set amount to spend and restrict what they spend it on. You control the cards’ limits and can change them anytime online.
Cut Overhead
Otherwise known as operating costs, overhead includes the ongoing expenses that are necessary to run your business but aren’t directly associated with your product or service. These typically include rent, materials and utilities. Overhead expenses can quickly eat up money. Fortunately, there are many ways to trim overhead costs. Try these:
Let your employees work from home at least occasionally. If you let everyone work from home on the same day or days of the week, you’ll save money on utilities at your business during the days when the office is “dark.”
• Keep the remote team connected with a tool like HipChat.com, which offers group chat and instant messaging along with screen sharing and file sharing. HipChat Basic is free; HipChat Plus starts at $2/user/month.
• Do you have extremely visual projects that require collaboration, or is brainstorming an important part of your business? Perhaps you own a web publishing firm, interior design business or wedding planning company? See it all remotely using RealtimeBoard.com, which lets users upload and review materials, including photos and videos; provide feedback; take notes and draw ideas on a virtual “whiteboard,” all in, yes, real time. A team account costs $10/user/month.
Save on bills. Utilities are most likely a big part of your overhead. Most small businesses waste energy without even realizing it. Contact your local utility companies to receive an energy audit and recommendations for ways you can cut costs. Most utility companies offer this service for free.
Consolidate. Would you like to wrap all your workspace costs into one simple payment instead of dealing with separate bills for rent, utilities, Internet access and more? Or maybe your business is such that you don’t need a dedicated, full-time office at all, but working from home isn’t quite right either. Check out co-working spaces in your area or office space providers such as Premier Business Centers. These offer a wide range of options, from the use of a full-time office with phone, mail, Internet and reception service to as-needed use of offices or conference rooms. Pricing starts at $30 per hour for meeting rooms.
Slash vehicle costs. Does your business rely on delivery vehicles, business vehicles, or a fleet of trucks or vans? Consider purchasing certified pre-owned vehicles, which just about every manufacturer offers these days. Certified pre-owned vehicles are used cars that go through rigorous quality inspections before being sold and come with a limited warranty.
If you’re more worried about rising fuel costs than the upfront cost of buying vehicles, it may be worth paying a bit more for “green” vehicles now in order to slash your fuel costs later. There are tons of environmentally friendly vehicles to choose from. However, the Honda Accord Hybrid and the Lexus ES 300h were voted among the top 10 green cars of 2014 by Kelley Blue Book.
Don’t Miss Miscellaneous Expenses
When it comes to expenses, little ones can add up to a lot. There are a lot of simple ways to cut costs that can result in big savings.
For instance, you may be able to barter for products and services with other businesses instead of buying. If you own a website design company, you might provide free design services for a public relations firm in exchange for its providing you with free PR services. You can barter directly with businesses you know and trust, or you can join an online barter exchange such as IMSBarter.com, ITEX.com or PremierBarterExchange.com to connect you with other deal-makers around the country. If you barter on an individual basis, be sure to put the terms of any trade agreement in writing. And remember, the IRS considers bartered goods and services taxable income.
Another good way to cut back is to rely on the cloud. Storing documents and data in the cloud saves on paper, ink cartridges, printers and file cabinets—not to mention helping the planet. Cloud storage options such as Dropbox and Google Drive offer free cloud storage that’s more than adequate for most small businesses’ needs, but if you require more space, you can upgrade to paid versions.
It’s also important to review your business insurance policies annually. Many entrepreneurs renew their policies every year without question. Instead, meet with your insurance agent or broker to discuss ways you can cut costs while keeping adequate coverage. For the greatest savings, it’s a good idea to work with a broker who represents multiple insurance companies rather than just one. She can help you compare policies to get the best rate for your business.
Want even more info on keeping more of your profits? Check out 6 steps to boost cash flow.
