Cutting expenses has become an unfortunate reality for business owners across the country for a variety of reasons: the rising cost of supplies, payroll, and keeping your work environment safe from COVID-19, to name a few.
Cutting expenses is never easy, but sometimes it’s necessary if you want to remain profitable. When it’s time for a small business financial evaluation, every expense is open for discussion.
Not sure where to start? Keep reading for our tips on how to cut business costs.
Cutting Expenses: Examine Your Budget
The best place to start cutting expenses is with your existing budget. Do a thorough review to see where you can make significant cuts. If there are items such as an upcoming holiday party or a major non-essential equipment upgrade, consider canceling or delaying the expense.
During difficult financial times, you’ll need to make hard decisions for the greater good of the business’s bottom line.
Re-evaluate Employment Methods
Payroll is one of the most significant small business expenses. Having to lay off employees is a difficult choice when you need to cut business costs. Before making a final decision, consider these options:
Ask employees to take a cut in hours. Depending on the number of employees, the savings can be beneficial.
A popular trend is outsourcing job functions. It would help if you considered contracting with a call center vs. paying a full-time receptionist. Virtual accountants and administrative assistants produce cost savings for a business struggling financially.
Simplify Marketing and Advertisement
In the digital era, it’s easy to cut marketing expenses. Instead of spending five to 10% of your budget on marketing and advertising expenses, utilize social media to promote your brand.
Digital advertising is inexpensive, and you can repurpose marketing material you already have in-house. Offer an internship to a college student or tap into the skills of current employees.
Invest in APPS and Software
There are countless apps and software on the market to help reduce small business expenses. Online stores and fulfillment services can help retailers reach wider audiences.
You can simplify accounting processes by utilizing an accounting software program and hiring an accountant to do your taxes. Human resources software is another way to cut small business expenses.
If feasible, upgrade your website with self-service tools customers can use to view and update their accounts. AI and chatbots can provide answers to common questions.
Negotiate with Vendors
Don’t be afraid to negotiate with vendors. Your telecommunications and internet providers might have cost-effective plans. Consider ending leases and buying out the contract on equipment.
Grow Your Business with a Balanced Budget
Utilize these tips on cutting expenses to balance our budget. The best way to know where and when to reduce costs is by partnering with a financial expert like Nolan Accounting.
Get the expert advice and strategic financial planning your business deserves. Click here to learn more about what we can do for your small business.