Running a small business can be tough. If you’re not careful with your expenses, you can easily go into the red. Thankfully, there are many things small businesses can do to save money. Below are five strategies for saving money on all your most important expenses.
Don’t Tie Up Too Much Money in Inventory
At home it often pays to buy in bulk but in business capital is usually scarce and if you are borrowing money capital is expensive. In order to be successful, you have to weigh the cost of capital against any savings for buying in bulk. So while it may appear that you are paying less for each item, you will probably be wasting money in the form of overstock. Instead, try to keep inventory to a minimum with “just in time” ordering i.e. only order new stock when you’re close to running out. It takes a little bit more work and logistics, but there are plenty of programs and apps that can make the task easier.
Minimize Fixed Costs
Fixed costs are things like rent, that do not change based on how much you produce. Utilities may have a fixed component as well as a variable component. For instance, you will have to pay for heat and lights whether you produce 1 unit or 10,000 but producing 10,000 will increase your electric bill due to running the machinery to produce them. By keeping a lid on rent and utilities your fixed monthly expenses are lower and so you break-even sooner. You can slash some of this cost by switching to energy efficient appliances. Compact fluorescent light bulbs, for example, tend to last for 10,000 to 15,000 hours. Compare this to incandescent light bulbs that last from 800 to 1,000 hours. And CFL light bulbs use one third to one fifth of the electricity that incandescent bulbs use. This can certainly lower your utility bills.
Use Coupons
Most people associate coupons with buying groceries. What you may not know is there are many stores that sell business and office supplies that take coupons as well. For example, you could use a website like Discountrue to obtain coupons such as free shipping for Overstock.com. If you are buying a lot of office supplies on a regular basis, using coupons like these can easily save you a lot of money.
Use Online Marketing Strategies
In the old days, the only way to market products was to purchase extremely expensive television, radio and print advertisements. Thanks to the internet, however, those days are over. For example, a business can sign up for Twitter and Facebook accounts for free. Once set up, you have the ability to market your products and inform your customers of new sales and promotions with zero overhead expense.
Tap in to the “Gig Economy”
Some of the biggest expenses of running a business are payroll and employee benefits. However, as a small business, you may be able to get away with mostly using freelancers and part-time help which can be much more economical. Just look at Uber which has built a billion dollar business based on freelancers. See The Gig Economy Is the New Normal.
Overall, running a small business at a profit can sometimes be excruciatingly difficult. However, if you pay attention to the small details and slash expenses where you can, you have a much better shot at success.
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