Is your business generating the most revenue possible? A business can have excellent sales numbers, but still be losing out on profit. There are some surprising ways your company’s expenditures may be cutting into profit margins. The good news is that these costs can be effectively managed to maximize revenue without sacrificing necessary expenses. Here are some unnecessary expenses you can cut or restructure to save money now and into the future:
Personnel – With online services and large outsourcing companies, small businesses can outsource accounting, legal services, IT services, marketing, and other services. Businesses can choose which processes to outsource for the most cost-effective solution. For instance, businesses may want to keep an in-house person on staff but may outsource any additional work as needed. Others prefer to outsource entire departments to save money.
Inventory – A well-managed inventory system prevents product from going to waste. Business owners commonly over-estimate their needs for the near future. Only purchase inventory for expected short-term sales, and move products out on a “first in, first out” basis. Consider discounting items that have been sitting on the shelf for too long to get as much money possible out of your investment.
Telecommunications – With new technology coming to commercial enterprise at a rapid rate, all businesses should be looking at updating their systems. Traditional call systems are clunky and may require on premise hardware and software that needs regular servicing to perform properly. Business solutions like Booth are easy to set up, cost-effective, and utilizes your existing cell phone for easy access. Learn more about this scalable virtual phone solution.
Paper – There is no reason to keep records on paper anymore. Important documents may need to be filed away for safekeeping, but many records can be effectively managed with a paperless system. Make customer communications a greener experience and encourage office staff to print fewer documents as a start. Using green appliances can also be a cost saving investment. Transitioning to other green practices can save your company money over time and you may also earn incentives for going green in the process.
Pricing – Loans, outsourcing services, suppliers, and other providers are all typically open to negotiation. Read through contracts and start systematically calling companies to see if you can get lower rates and prices by switching up your contract or moving to another service provider. Many companies prefer to negotiate a fair price rather than lose your business as a customer. Long-term business relationships are made by effective negotiations that help both parties reach their goals.
Bills – Look carefully at every bill that comes to your business. Keep receipts and balance the books regularly. Service providers make mistakes regularly, and some may sneak in additional costs in complex arrangements. Don’t hesitate to call up your HVAC company, communications partner, or another service provider to go over a bill line-by-line. As a business owner, you should understand where your expenses are going and how they benefit the company. If you’re being charged for a product or service you don’t use, switch to another provider or negotiate a fair rate.
Unpaid accounts – Customers who owe the company money can cause problems in the accounts receivable department. Reward customers who pay regularly, and repeatedly follow up with those who don’t. Make sure that customers who buy on credit are paying before the due date and charge penalties when payments are late or go unpaid.
Purchasing supplies on your own – Instead, work with other non-competitor businesses to secure even lower rates on basic office supplies and other needs. As an added bonus, you can use the partnership to cross-sell goods and services and reach an even broader market. Many small and mid-sized businesses are partnering up for the mutual benefits they can offer each other.
Buying what you see – For insurance and other costs, shopping around before you make a purchase can make a difference in how much you pay in premiums every month. Like other partnerships and service provider arrangements, long-term investments should be carefully considered. Find a professional that you can build a relationship with and who will help you make cost saving decisions for your business. Always complete independent research before you have established a trusting relationship to make sure that you are not being unwittingly charged for something you don’t really need.
Paying for marketing/advertising – Reduce marketing and advertising expenses by engaging with customers on social media. Get a family member or an intern to monitor and respond to conversations about your industry, brand, and individual products/services. There are several ways small businesses can use online platforms to reach out to the market for free.