If you run a business, you know that keeping costs low is a relentless battle. It’s the cornerstone of good business, but it’s harder than ever to make ends meet. After all, you know that every company lives or dies by its balance sheet. And those spreadsheet numbers will often haunt you in your sleep! Don’t worry, there is another way. In this post, we’ll show you exactly how to cut costs. We’ll show you the tried-and-tested techniques that will keep your finances afloat.
Everything on this list is a small change that can be easily implemented. We’re not suggesting mass redundancies or vast company restructures. In fact, you can put most of these tricks to work immediately. When it comes to money, all the small changes add up. That’s ultimately how you keep your business working smoothly, even when under pressure. We know that reigning in the spending isn’t easy. But, it is possible, and it will give your balance sheet some breathing room. Let’s take a closer look, shall we?
Save on foreign exchange fees
One of the most common costs of doing business is managing foreign exchange fees. Every time you send money abroad – or receive it – it costs your company money. Traditional banks charge a premium to send money on top of the standard exchange rate. Transferring money from Australia to Hong Kong is particularly expensive. If you do business in one of these two countries, it’s worth exploring other options. For example, a private foreign exchange company will usually offer lower premiums. If you send a lot of money back and forth, this amounts to a big saving.
If you’ve got a project or job lined up, consider hiring contractors. Rather than employing a new, full-time member of staff, you’ll get better value by hiring freelancers. You only pay them on a project-by-project basis, so you pay for what you get. They can also work independently, so there are no additional office costs to consider. Lastly, you can avoid the additional tax burden as they are in charge of their own taxes. There are more contractors and freelancers than ever, and the talent pool is large.
Pool your purchasing power
We all know that buying your supplies in bulk offers large discounts. However, as a small business, you don’t necessarily need bulk supplies. In fact, buying in this way leads you to spend more money on supplies you don’t need. But, if you pool your purchasing power with other local businesses, you can access the bulk discount. For universal supplies, such as office stationery, paper etc, get together with other local businesses. Put in one large order and split the discount.
Negotiate with suppliers
It’s also possible to secure a significant discount when you haggle with your suppliers. Now, not everyone is gifted in the ways of negotiation! It’s a tricky skill to master. However, it will serve you well in the world of business. Every supplier has the ability to move the price around, especially if you offer something in return. Promise your supplier a long-term contract, for example. This might just convince them to give you a discount on your next order. Always ask for a lower price; you never know what might happen.
Change your utilities
Do you pay your utilities bill each month without considering the cost? It’s an essential business cost and we all pay without thinking too much about it. Whether it’s electricity, water or internet payments, they’re all the same. The truth is your utility rate is quite variable. Even more so in the commercial world than your domestic suppliers. Get on the phone to alternative providers and see if you could bring the price down. Even threatening to leave your existing supplier might give them the push to offer you a lower price.
You might worry that interns have little experience or skills. However, they have something else in abundance: passion and motivation. Rather than hiring an expensive, experienced employee, look at the graduate market. Find someone fresh out of university with excitement and creative ideas. You can teach them the basics and harness their ambition. You can also pay a substantially lower wage than a seasoned pro.
Often, the biggest costs of running a business come from the office itself. The bigger your office, the more rent you’ll pay. It also costs much more to heat and power a large space. However, if you embrace telecommuting, your employees can work from home. It will free you up from paying for electricity and providing some equipment. Your employees will love the flexibility, and it may even improve their productivity. If you still need people in the office, simply use a rotating system so you can operate a smaller space.
Curb travel expenses
There was a time when businesses held enormous budgets for travel. Business class flights and five-star hotels were par for the course. Unfortunately, this luxury business travel attitude will put a huge drain on your finances. Nowadays, you can take advantage of budget travel options and save yourself a fortune. In many cases, you needn’t travel at all. Instead, you can simply take meetings over Skype or conference call.
Cut your tax bill
Every business knows that their tax bill at the end of the year cuts a large chunk out of their balance. Corporate tax and income tax all adds up over the year. However, you can reduce your obligation somewhat by writing off the tax for expenses. When you purchase equipment like computers, you can claim back the VAT. It’s also possible to claim travel expenses and all sorts of other business-related costs. Speak to your accountant about how you can minimise your tax bill.
Running a business is hard work. It’s made even harder when you try to balance the budgets every single day. Follow some of the advice here, and you’ll slice costs off each aspect of your business. Remember, it’s the little changes that make the biggest difference.