You need funds to keep your business going. When you are new to starting your small business, the common problem that you will face is the probability of coming shortly in finances. Of course, the sales are not already reaching the peak level and you are still in the process of gaining traction. As a business owner, you should be aware of this scenario.
A slight drop in your revenue or a small increase in expenses can greatly affect the company’s profit and make a negative change in business operations. For example, your wholesale supplier may increase the cost of the product supplies by 8 per cent this year, slicing your profits.
It’s time to be prepared and be aware of the proper business practices and knows how to adapt to emerging challenges.
Here are the 10 tips on how can you cut your business costs and stay afloat.
1. Reduce the cost of supplies
Look for opportunities where you can land the best deals possible. Don’t be shy to ask discounts to suppliers because they are willing to give you a good offer especially if you make payments on time. You’ll be surprised that they can give the same amount or quantity lower than traditional price.
This difference can save you money on supplies and goods. Do not settle on purchasing at one supplier but investigate other alternative sources and monitor the supply costs. Compare them and check for discounts.
2. Make the most of your office space
Make an analysis of how you use your office space. A good office must be functional and helps the business to operate efficiently. Are the spaces properly divided for their corresponding functions? Ad placement of furniture as well as overflowing storage can waste the space that should be allotted for something beneficial.
Also, consider centralizing the different departments of your business and maximize the purpose of each space. For example, a storage room can also work in a meeting room. It’s also a good idea to observe the commercial real estate around your area and see if you can benefit from lower-priced quarters.
3. Be wise on Advertising Costs
Are your marketing efforts giving you great results and return on investments? Let’s say, they are working and they are performing good, but the fact it consumes a portion of your money. It does not mean that you will eliminate your advertising but to simply make things cheaper. If traditional marketing costs you more, try the modernized way. A lot of business owners are using social media to increase presence and to network with their potential customers. Referral, business cards and email newsletters are some of the cheap ways to gain more clients.
4. Cut Staffing Costs
If you have too many staffs and you think the amount of workload is less, they can handle, you can start considering to reduce some employees. It can be done by simply assessing their skills and competencies and how productive they are. You can ask them for unpaid time off and politely discuss the matter. You can get them back once your overhead costs drop low and when the business has picked up.
Another helpful idea is to involve your family in the business and make them help you perform other tasks. For example, your wife can do the bookkeeping and customer service while you train your kids or relatives of appropriate age on the nature of your business. Not only it gives them valuable work experience but also cuts the expenses and creates more money for the family.
Another good way of cutting staffing costs is setting up a dropshipping business. This is a business model characterised by its unique mode of product fulfilment, where the sellers does not store any merchandise. Instead, products are shipped directly from the supplier to the buyer. Typically, the best dropshipping products can be found on AliExpress, however there are other retailers that are worth looking at, such as Alibaba, Walmart, etc.
5. Avoid getting in financial debts
Annual insurance bills have skyrocketed these past years and it affects a lot of small business owners. As a business owner, it is your task to identify what business insurance will be the best suitable for your business. Conduct a review of your insurance requirements and get only the type of business insurance that you can afford. You can consult Loan Advisor to give you the best advice concerning the loan and the rates that would qualify for your business.
It is also important to avoid being involved in high-debts. Most businesses are tempted to borrow huge money for business expansion without performing cost-benefit analysis beforehand. The future is uncertain and the debt payments will definitely affect your cash flow.
6. Employ proper time management
One of the reasons for a large overhead cost is that the employees not being productive. Time lost is money lost. If a project takes too much time to finish, you need to evaluate how well they are doing it. Maybe there’s something wrong with the process or the staffs are relaxing.
If you own a business, you should know how to create strategies on how your team can efficiently use time and increase productivity.
Address your staffs about the goals that should be met within the given timeframe and let them know your expectations. Encourage them to focus more on performing their duties and minimize work distractions. You can also motivate them by giving rewards or incentives. Monitor their progress and develop ways on how you can speed things up. Schedule a weekly meeting where you can discuss the objectives and evaluate the performance of your employees.
An organized workforce is key to grow your business. Remember that you’re the best assets of your business is not money but the people who are working for you.
7. Take it step-by-step
The problem with many businesses is they want to succeed early. They are too eager to expand their business, projected that they could massively generate profit in a short amount of years. Every successful business started at the bottom and make their way on top. It is a process. There is no shortcut.
The tip is to narrow the focus of your business. Instead of offering many services, try to specialize in specific services that you can deliver the most quality. You can expand your services soon as you improve on delivering your primary services. If you cannot accommodate many clients at a time, you can try subcontracting them and still keep the profit.