Entrepreneurs need good financial sense to run a business or organisation well. Of course, even the leanest, most-well-run companies tend to have areas where they could save money.
Too-high payroll and inventory tend to be money drains and lend themselves to long-term problems. Try out these ideas if you’re looking for ways to save your business some cash, whether it is a little or a lot.
1. Organise by position rather than by employee
Some workforces are organised by employee, but a shift to position management could save your business a lot of money and streamline operations. Your workplace could particularly benefit if employees wear many different hats and/or you have part-time employees doing the equivalent of a full-time employee’s work.
With position management, factors such as salary and job description are tied to a position rather than to an employee. It makes hiring and filling positions easier since a new employee “inherits” the attributes of a position. The chain of command stays intact when someone leaves, too, because approvals and requests just go to the next-highest position in the chain.
2. Examine your rent and real estate expenses
Rent and real estate expenses gobble up a huge chunk of overhead. By shifting to more of a telework approach, many businesses have saved significant money. You can still have a coworking facility or office space if operations require it but save money on a smaller footprint or on space in a less expensive location.
If you seem stuck in a long-term, costly lease, see if you can sublet some space to offset expenses. You can always reach out to your landlord, too, to see how flexible he or she is with the lease. Commercial landlords do renegotiate leases, either to shorten terms or reduce monthly payments. Another type of compromise could be possible, too.
If you’re getting ready to sign a new lease, keep a few critical factors in mind. The length of the lease, how much the rent could potentially increase every year, and any tenant improvements you need are important.
3. Cut out the paper
Going paperless can mean more cash for your business. After all, printing and paper expenses add up fast. Go digital for contracts and other documents, electronic signatures, and even receipts. You also save on costs for bulky equipment such as faxes and printers, and the extra “green cred” your business gets makes it more attractive to potential employees and customers.
4. Review contracts and services
Take another look at business services such as internet service, cellphones, employee health insurance, software, and more. Contact vendors and ask how to get reductions. You can also comparison shop to see if other vendors offer quality service for a lower cost. Making just a few emails or phone calls could save thousands of dollars.
5. Automate payments if you don’t already
Automatic payments are great because you don’t miss payment deadlines and incur fees or penalties. Some vendors love them so much, they give you discounts for paying early, too.
In short, if you don’t already automate payments and/or make payments early, now is a good time to start. For example, if you pay for six months’ worth of service automatically every six months, you could get a 5 percent discount or more. Of course, do this only if you are sure your business bank accounts will have the funds when these times come or that you can pay off the credit cards the expenses are charged to at the end of the month.
6. Choose your business credit cards wisely
Credit cards can mean free money or rewards in the form of cash back, airline miles, or rebates, among other things. Be selective when choosing your business credit cards instead of more or less blindly picking the first one to come your way.
Whatever type of card you pick, pay the balances off completely each month to avoid interest fees. Automate the payments to avoid late fees, too. Do not use personal credit cards for business expenses because of liability reasons. It also leads to financial tangles that can be costly to undo.
7. Shift some work to freelancers
Working with freelancers saves your business money as far as health insurance, overtime, and various benefits. Your organisation does typically pay a freelancer a bit more per hour, but the savings should tilt in your favor after you factor in all these other expenses. Bookkeeping, accounting, managing social media, and marketing are examples of common positions that freelancers rather than in-house employees handle.
8. Focus on getting out of debt
Some businesses try to save money while they are slowly being choked by a huge mountain of debt. If that sounds counterproductive, it kind of is. Rather than a generic “trying to save money” effort, focus on getting out of debt. That likely saves your business the most money and keeps it alive to serve customers and clients another day.
Businesses turn to various methods such as hiring freelancers and paying off debt to save money. There’s no right or wrong approach per se because each business situation is different. If a tactic another business tried sounds great, check that it makes sense for your company before you proceed with it.
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