Managing costs is essential for all companies, but is most keenly felt for the small business operator. Emerging businesses are typically cash-strapped, with every dollar saved or spent having a greater affect on the balance sheet. There are various cost-cutting measures any business operator can implement including those that will positively affect your financial outcomes.
Start Off Simply
If your business has not officially gotten off of the ground yet, consider starting it off simply. Overhead is an expense that will affect profitability; therefore if you can begin your business in your home, then you will avoid paying rent and make use of the utilities you already use.
For those businesses needing or requiring separate space, consider taking over another business’s lease or finding a short-term lease to avoid the long-term commitment. Locking yourself into a multiyear lease reduces your flexibility and may keep you from moving up or down in size as needed.
Use Contract Workers
If you need to hire workers, consider starting off with contract workers. At least at first. Employee law varies from state to state and the US Department of Labor will penalize companies that violate federal guidelines.
Using contract workers can be a great way for your business to manage costs, enabling you to pay your people by the hour and avoid the expense of providing certain benefits such as medical coverage and vacation pay. You also gain the opportunity to try out workers before offering them a permanent position, avoiding the time and cost of hiring the wrong people that simply are not a fit for your company.
Streamline Your Connectivity
Business connectivity, such as personal computers and phone lines, have long hamstrung emerging enterprises. These costs include a wired workstation for every employee, presenting an enormous overhead for any business.
These days you can eliminate the business phone system completely by providing smart phones for your employees. You may be able to replace expensive desktops with laptops or even more cost-efficient tablets. Consider offering one dedicated phone line for your business with each employee reachable directly by means of their portable phone.
Pool Your Resources
“Going it alone” is the American way, but it can lead to greater costs for the emerging enterprise. Likely, there are certain expenses you can share with other businesses, people that are also looking to save money.
For instance, your business might provide landscaping services, giving you an opportunity to team up with other home maintenance companies. Those businesses might include a pool cleaning service, a roofing company, a patio furniture business and a children’s playground designer. Your individual advertising campaign might be combined with complementary businesses, reaching the same pool of customers together instead of separately. Use various print, Internet, and broadcast methods to get the word out, dividing up these costs among your advertising partners.
Skip the Recruiters
Emerging technology companies needing very specific talent will often turn to recruiters to find the right people. Recruiters may charge up to 30 percent of your new hire’s first year salary, an expense that few small businesses may be willing to swallow.
One overlooked area where businesses large and small can find talent is through their college’s recruiting office. Recent graduates will often list their availability through the school’s college and career office, enabling businesses to tap that list in search of the right candidate. And as a graduate of that school you already have the connections to find the right candidates fee-free.
Choose Your Vehicles
If your business relies on vehicles to reach and service its customers, your choice in transportation will have a great impact your profitability. Quite easily you could rely upon a $25,000 gas-powered as your fleet favorite, but you might also consider various alternate vehicle options including electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs).
Both EVs and PHEVs cost more than traditional vehicles, but federal and state incentives can help reduce overhead. For instance, the Nissan LEAF EV and the Chevrolet Volt PHEV qualify for a $7,500 federal tax incentive. Moreover, some states add incentives on top of the federal tax breaks. Other costs such as oil changes, tune ups and gas station visits are reduced or eliminated, making it possible to recoup your expenses in the long run.
You can find additional savings for your small business by soliciting competitive bids from package delivery companies, downloading open-source software and by using cash-back credit cards for your purchases. Combined, every effort you make to save money will help your business, enabling it to compete even in the toughest business environment.
Lowering Your Rates Could Just Kill Your Business
You Need to Implement These Four Things in Your Business
You Need to Know These Five Accounting Tips
Hire the Right Graphic Designer
Stand Out from the Crowd
Are you Winning? Using the Figures to Boost Your Home Business
Automate Your Business to Grow!
How Smart Entrepreneurs Manage Inventory