The phrase “a penny saved, is a penny earned” isn’t just a catchy saying for small business owners. It’s a way of life. Cutting costs is vital to the success of a small business because it increases ROI and allows more capital to be invested back into the business. Even cutting seemingly inconsequential costs can quickly add up and allow for a more flexible budget. Since saving money is so important for small business owners, let’s take a look at several easy ways that you can cut costs and streamline your business.
Improving Employee Productivity
Getting as much out of your employees is essential for running a successful business. However, there are ways to do this other than increasing work hours while decreasing wages and salaries.
Employee productivity is tied very closely to their mindset. A positive work environment where employees feel valued and useful will encourage them to put more effort into their work because they take pride in it. On the other hand, employees that hate their job, resent their boss, and feel like their work is meaningless tend to slack off and generally do a poor job because they feel like it doesn’t matter.
Streamlining Business Operations with Software
The right software can make even the most complex tasks simple, easy, and efficient. This is especially true of software integration platforms which can bring together many different small business operations under one umbrella. However, sometimes more specialized software may be needed, such as software that helps make shipping and handling more efficient. For example, UPS and FedEx audit software for businesses helps companies save on shipping costs. It does this by finding the best shipping rates, expediting the shipping and handling process, and calculating the best shipping options on an individual basis.
Tapping into the Gig Economy
Providing employees with various benefits such as health insurance and retirement options can be a significant expense for small businesses. While retirement plans aren’t legally required in the US, and health insurance must only be provided for small businesses with over 50 employees, not offering these benefits can lead to negative company culture and less productive employees.
The good news is that benefits are neither required nor expected for contractors and freelancers. By tapping into the gig economy, a small business can hire workers to perform essential tasks without spending money to provide them with benefits. In many cases, contractors will work for less than what you would typically pay for an employee’s wages or salary.
To make the most of the gig economy, small business owners should assess their company and see which tasks can be outsourced. By outsourcing a portion of their workforce, a small business owner can increase operational efficiency and save money at the same time.
Data-Driven Marketing Course Correction
Marketing is essential for practically every business. However, it can be highly wasteful if not done efficiently. This can be difficult since early marketing efforts often miss their target by misjudging the demographic, incorrect messaging, or not advertising on the right platforms.
Research is essential for improving the effectiveness of your marketing, but so is a gradual data-driven improvement based on the results of previous campaigns. This method of optimization will cut down on wasteful spending and generate a more significant ROI over time. Marketing efforts that perform well can then be upscaled, while those that don’t can be terminated.
Mind Your Taxes
No one likes taxes, but for a small business, they’re one of the most obnoxious expenses since there is no immediate value to be had. Fortunately, there are many ways you can save money on taxes, such as deductibles, employing family members, and changing your location. Getting a full report on just how much you can save on taxes for a small business usually means hiring a tax professional to go over everything. However, this is a small price to pay, considering how much money you can save by taking advantage of every tax break and loophole you have access to.
Assessing Business Expenses
As a small business owner, you need to have an in-depth understanding of all of your expenses regardless of the methods you plan on using to save money. Seeing the big picture by assessing every business expense will give you a better idea of where improvements can be made and where savings can be found. In most cases, efficient cost-cutting results from a lot of minor adjustments that add up to significant savings. In any case, the sooner you begin cutting costs, the sooner you’ll see an improvement in your ROI.