When you are running a small business you are always looking for ways to cut costs and increase revenues. Whether you have employees or not, the budget is always a very important part of your business. When you’re trying to cut down on your business expenses you might think of cutting down on paper, ink, snacks, the coffee machine, etc. but there are other ways to make a difference that will be longer lasting and increase revenue as well.
1. Take Advantage of Internet Marketing
If you are not taking advantage of internet marketing, it is time for you to consider it. If you already use internet marketing and have only allocated a very small budget for it, you may want to consider increasing that budget. Just about everyone touches the internet a couple of times a day, and having access to users can give you more consistent results in your revenue. Afterall, increasing revenue does amazing and wonderful things for your bottom line.
2. Make Bulk Purchases
Wherever possible, you should consider buying items in bulk. What costs 75 cents per unit when you order in quantities of less than 50 may turn out to be 67 cents per unit when you order them in quantities of 100. As long as you have the ability to store and move larger quantities of your raw materials, you can experience significant savings just by purchasing in bulk.
You can also purchase services in bulk. Paying for services and utilities annually instead of monthly can make a big difference. And using a transparent fixed cost phone system like Gabbit.net can also do wonders for your budgeting and your bottom line.
3. Focus Your Message
Having a clear message save your time and effort. Customers know why they should choose you over your competition. The value of your company is clear and sales will close a whole lot faster. This can allow you to narrow your marketing funnel, cutting costs and increasing revenue.
4. Dynamic Budgeting
Creating your budget at the beginning of the year or season and not checking in with it again until tax time, the end of the quarter or some unforeseen mishap is not good for business. Check your budget regularly. Depending on the nature of your business, you may need to look once a week, or maybe once a month is good for you. You want to be able to adjust it as needed and reallocate funds when the time is right, and that is what a dynamic budget is all about.
5. Web Development
If you don’t already have an online presence, you need to create one. While web development is important, it doesn’t have to be too complicated or too expensive. A great website won’t cost you pennies, but it doesn’t have to cost you thousands either. It probably isn’t the best idea to do it yourself either, unless of course, you’re a web developer or an IT person who has the experience and know how.
There are tons of things that go into your small business that you can outsource to save yourself both time and money. Take the handling of sales for instance. Perhaps you only accept checks and cash because you are attempting to avoid merchant fees. Having to manually process your sales can be very inefficient and quite inconvenient. It can also mean that you are not making as many sales as you could be, because you are alienating a portion of consumers who do not typically conduct transactions that way. But if you were to switch to an automated system like QuickBooks and integrate your merchant account, you could accept more forms of payment more efficiently and for less.
In fact, anywhere there is repetitive action is a potential area for outsourcing. You can automate your emails, your paperwork, your client or customer interactions (to some degree), inventory management and so much more. When your system becomes more efficient you will gain more time in your schedule and increase the amount of revenue that stays within your business.
7. Monkey See, Monkey Do
Look at other companies that are similar to yours. Look at companies that are totally different. Feel free to borrow any strategies that they use that can help make your small business more financially efficient and sophisticated. Just because you’re a small business doesn’t mean that you can’t perform like a larger company. Chances are, you will see a marked improvement in your bottom line by scaling down larger organization’s best practices.
8. Do Some Market Research
Not only will some market research help you set measurable and attainable goals for your business, it will also help you get better results for less money. You’ll be able to better understand your customers and their needs and how you can meet those needs. This can be done with surveys, tapping into a different talent pool, like students, studying your competition and much more. When you know what to do to make your business better, revenue tends to increase with the implementation of those things and your bottom line improves.
9. Closely Track Your Inventory
Perhaps you have a lot of your business’s money tied up in inventory if you are running an inventory based business. While it is good to have enough inventory to match the demand for it, there is a such thing as too much. If your inventory is sitting around for too long, your revenue is likely not where you want it to be. You may need to scale back production which can mean less labor hours, lower utilities, etc. in the interest of improving your bottom line.
10. Reassess Your Office Supplies and Overall Budget
Almost every business needs pens, paper, staplers and the like, but there are ways to cut back here. If you have a coffee machine, you can ask employees to bring their own mugs and do away with paper or styrofoam cups. You definitely don’t want to overdo it and install pay toilets or track pen and sticky note usage.
What you can do, however, is go over your budget with a fine tooth comb. Look at every item that you spend money on and ask if it is really necessary. Does your business have a magazine subscription that has outlived its usefulness to you? Are you paying for two deliveries a month of a particular item and you really only need one? You may find some unnecessary expenses that you can get rid of or find a better price for.
11. Negotiate With Your Suppliers
Make a list of your suppliers if you don’t already have one and order them according to relationship. Vendors that you use most often or spend the most money with is where you want to start. Because you typically make a large purchase with a vendor, you may be surprised to see just how willing they will be to work with you and negotiate pricing. As you work your way down the list you may encounter a supplier who is not willing or can’t bring down their pricing for you. If this is the case, you should start considering other suppliers as a replacement. Sometimes you can find a quality supplier that will be better for you bottom line, and other times you can’t. Always keep an eye out for potential vendors. Choosing your partners wisely can do a lot to help your business grow and flourish.
Another area that can benefit from a little negotiating is your lease. If your office or retail space is taking a huge part of your revenue, then you definitely want to see if you can change that. You can also reassess the option of leasing or buying equipment. You may be surprised at what you uncover in these two areas.
12. Tackle Your Debt
Debt can be the source of a lot of angst for a small business. Sometimes when paying off debt is part of your monthly budget, it can cut into your bottom line much more than you may have anticipated. But take heart, there are a few strategies you can implement that can make the debt burden a little less taxing on your business.
Make a list of your debts and note the type of debt it is. Then document just how much of your revenue is going toward the satisfaction of those debts. You should also note the interest rates on each. If any of your interest rates are above market conditions, give the debtor a call and try to negotiate for a better rate so that you are able to hold on to more revenue moving forward. And even if your interest rates are not above market conditions, you can still place that call and see if you can work out arrangements that better suit your cost cutting efforts.
Of course, there is only so much that you can cut as a small business, so make sure that the cuts you decide to make are more beneficial than detrimental. If you have employees, be careful not to take the cuts so far as to damage their loyalty, sense of security or their morale. Remember, there is no shame in cutting corners, but you just have to do it with a gentle and discerning hand. It’s like going to your barber or beautician for a trimming and leaving with a haircut that is 6 inches shorter than you wanted.
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