The prices of everyday items are rising, affecting your small company. You can’t control price hikes, but you can cut business expenses to save money and improve your profit margin. Start by looking for excess fluff and performing a line-by-line review.
A line-item approach shows where you’re spending money (categories) and individual activities that add to your overall business expenses. This approach helps trim your budget and give your cash-strapped company some breathing room. Here are a few ways to identify waste and reduce spending.
Inspect your recurring costs
Nearly all small businesses rely on cloud-based subscriptions, from customer relationship management (CRM) to social media scheduling tools. However, orphaned subscriptions often go unnoticed. These commonly occur when employees leave, but their accounts aren’t deactivated. According to a 2019 Annual SaaS Trends Report, “71% of companies have at least one SaaS subscription with no billing owner.”
In addition, software as a service (SaaS) vendors frequently update their features, and the tools may overlap with other paid applications. Review your subscriptions, eliminate unnecessary users and talk with employees to see how they use the software. Contact your vendor before canceling or switching to a free version. They may extend an introductory price or offer a discount to keep you as a customer.
[Read more: 6 Tips for Managing Your Advertising Budget]
Ditch the landline
If you’re still hanging onto your landline, check out Voice over Internet Protocol (VoIP). It uses your internet to make and receive calls and can provide significant savings over on-premise public branch exchange (PBX) or multiline phone systems. Your exact savings depends on how many phone numbers and individual users you have.
Internet-based phone services are typically less expensive, offer more flexibility and can reduce your reliance on other third-party subscription services. For instance, a business phone system with a unified communications platform can handle your video conferencing, business text messaging, faxing and voice calls without the need for additional programs or equipment.
You may need to make some hard decisions when it comes time to replenish stock.
Assess your travel habits
Between the price of gas and vehicles, reducing your travel costs can generate substantial savings. Look at your budgets and expense reports to see how your sales team or support agents use their cars and dine-out funds and what your business gets in return. Then see if it’s possible to cut back without diminishing your service levels or missing sales quotas.
Remember to equip your teams for virtual sales and create incentives to shift to online selling, such as creating a goal to increase the percentage of virtual sales while decreasing in-person sales. Also, consider reducing off-site travel to trade shows and training. Instead, look for free or low-cost alternatives that engage and educate your team without the added expenses of airfare and hotel.
[Read more: 4 Helpful Tools for Managing Business Travel Expenses]
Evaluate your inventory
You may need to make some hard decisions when it comes time to replenish stock. Items that aren’t selling or have a low-profit margin may not be worth the money unless they serve a distinct purpose. Assess your cost of goods sold (COGS) and speak with vendors to see if alternatives exist.
Let your vendors know that you’re shopping around and see if there’s any price flexibility. Plus, don’t forget about office supplies. While we don’t recommend ditching the two-ply toilet paper for the scratchy stuff, perhaps you could save costs through a different vendor or buy break room supplies like coffee in bulk from a big box store. Or switch to mugs and metal spoons and drop the disposables.
Reduce energy costs
While making minor changes to your energy use won’t typically result in hundreds of dollars saved every month, it can lower your overall bill throughout the year. A digital thermostat is one of the best places to start. It makes sense to heat and cool the building to maximum comfort levels when people use it, but not so much when it’s closed for 12 hours a day.
Also, consider using motion-activated lights, preferably light-emitting diodes (LED), in your restrooms and supply and cleaning closets. Automating your lighting keeps dirty fingers off switches, increases safety and reduces your monthly bill.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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