Nearly 8 out of 10 businesses fail within the first year. Of those that survive the first year, nearly half of them will not make it to their fifth anniversary—and this is during a thriving economy. In tough economic times, the outlook for businesses is far worse, which makes growing business revenue incredibly difficult. While many businesses believe they have cut back on as many expenses as they can, there are other options to explore to reduce business expenses to expand the bottom line.
Here are six ways to cut unnecessary costs:
- Office Expenses
When it comes to office expenses, determine which ones are completely necessary. From there, you can figure out how those costs can be minimized.
Switching the business’ phone and internet security to a more affordable, efficient service can improve business operations as well as improve business expenditures. Order Vonage, or a similar service. Instead of paying for a separate phone line, Vonage attaches via the wireless Internet, which is more cost effective.
Additionally, invest in external hard drives to backup files, as it is not only safer than paper copies, it is also cuts paper costs.
Look to purchase office supplies in bulk. Most warehouses offer better deals than regular office supply stores.
- Invest In Employee Training
Although this might seem counterintuitive, investing money into training your employees will save money in the long run. Because of training costs, businesses tend to forego employee training in hopes that the employees will be able to learn quickly by shadowing existing employees.
Consequently, this can actually lead to more expenditure. If employees do not have proper training, their mistakes can cost the business money. By funding in-depth training, employees are less likely to make money-costing mistakes.
- Rent Equipment
Consider leasing or renting office equipment instead of purchasing equipment. Renting equipment is not only cheaper than purchasing, it also has more flexibility, as it is easier and inexpensive to upgrade to newer models.
- Outsource Administrative Functions
Instead of having in-house accounting and payroll employees, look to outsource to different companies. It is less expensive to pay an outside source than it is to hire someone, pay their salary, and pay their benefits.
- Contract Instead Of Hire
Consider contracting employees instead of hiring them. Contracting employees is cheaper because it does not include employee benefits, which are typically the most expensive part to hiring and maintaining employees. Many companies utilize this tool when they need to cut back on costs by rehiring their workers under this contract status. Once the business is back on track, employees can be returned to their permanent basis.
- Rethink Marketing And Advertising Expenses
Consider splitting marketing and promotional costs with other businesses. Not only are you networking with other companies, you are still getting your advertising to the public for the half the price. Consider sharing promotions with business suppliers who offer complimentary goods and services.
When it comes to cutting back, it is less about cutting all costs and more about restructuring the business to reflect money saving principles.