Small businesses always operate on small budgets which require a tight rein on costs. Tough economic conditions, recessions and slumps always have the worst impact on small businesses, survival is possible only by adopting cost control methods.
Small business owners today have the advantage of having access to a host of internet based services that come free or at minimal expenses and help them save on administration costs especially those related to IT. Cloud based services are a typical example of what small businesses have at their disposal.
Cost cutting requires the following:
- The inclination to cut costs that will come from the desperate need to do so
- Having access to ways and means of cutting costs
- Discipline, which will prevent the business entrepreneur from splurging even occasionally
- Being practical enough to admit that economic conditions are not improving
- Ensuring that others-colleagues or employees, are also convinced about the need to cut costs
Some of the ways of cutting costs and bringing down expenses include the following:
1. Getting rid of assets not in use- Even small businesses often have assets that are not often used. These may include office space that is not being used and can be sublet to another entrepreneur, or equipment etc no longer needed, which can be sold. If the rent of an exclusive office is high, sharing office space with another person may help in cutting expenses.
2. Buy second hand furniture and accessories in good condition- If a new business is being set up when economic conditions are still picking up, it is a good idea to keep setting up expenses low. Instead of buying new furniture, there are plenty of businesses going into liquidation, which will be selling their office furniture etc which is in excellent condition. Buying off such stuff will save costs by anything upto 50%.
3. Virtual offices- Some businesses do not require physical office space, all that they need is a good computer and internet access and they can function from anywhere. Many companies now function with virtual offices where employees stay in touch online, hold discussions through video conferencing and engage the service of freelancing management consultants who work out of home. If occasionally, a meeting is required, it can be accomplished by renting a conference room for a few hours, which would be a fraction of the cost of a monthly rental for even a two-room office.
4. Free business cards and stationery- Instead of spending money on personalized office stationery and business cards, use software available to print out your own with the computer.
5. Contract workers to replace full time employees- Small businesses can function with a lean employee base equally effectively. Since full time employees are a huge expense with salaries, perks and benefits, it is better to analyse whether they are needed at all, and perhaps it may be better to have employees on contract or a per contract basis. Besides the expense saved when business is less and no new projects coming up, even office rental expenses reduce since such a big office may not be required, and it may even be possible to give up the rented office and operate from home with a virtual office.
6. Save legal fees- Many small business owners spend huge amounts as attorney fees for legal advice. It may be time now to learn about the laws governing businesses and use one’s own knowledge and save all the fees being paid.
7. Give some, gain some- Businesses also benefit when entrepreneurs help each other. Your knowledge about some cost cutting measures can be passed on to others in a similar situation, and they too will reciprocate by sharing their information. You give some and certainly gain some in return.
8. Cut advertising, gain references- The money that you would spend on advertising and media publicity, can be spent more beneficially on existing customers in the form of a discount each time they refer a customer to you. This becomes a win-win situation since the entrepreneur spends in return for a new customer.
These tips may help in saving money which can be used more effectively to help make the business bigger and better.
This is a Guest post by Neil Jones of eMobileScan, one of the Uk’s leading Barcode Scanner experts, specializing in the Symbol LS2208