The Quick Checklist to Evaluate Your Small Business Expenses (and Save Money!)
As a small business owner, you don't always have much time to think about saving money. While your main focus is probably top-line sales and growth (as it should be), taking a little time to do some trimming and tightening up could help the money you make go further.
Since there's no better time to start than the present, we're here to offer you tips to reduce your overheard, increase efficiencies, and boost that bottom line.
Beginning with one of the simplest and quickest ways to cut back; evaluate the tools you're using. Tools such as content management platforms, marketing automation, or account and proposal software can be costly, and may not be worth it based on the stage your business is in and your goals. What is really needed to help your business be successful, and what isn't? Take inventory, noting their monthly, yearly, or even per-user costs and how beneficial they are to your business. Some may quickly float to the top that clearly aren't pulling their weight—or that you completely forgot you had.
Similarly, take some time to research competitive options. There are some tools or services you are going to decide you need to keep purchasing—like utilities, office supplies, or software tools that really save your team a ton of work—but maybe it's been a while since you've looked into other options for filling that need. There are a lot of new or competing tools out there, and some may be at a cost that's more conducive to your business. Do a bit of research to help find beneficial, yet cost-effective tools.
Find expenses that you don't really need—but that you've already purchased? Sell what you don't use. Many offices have old equipment laying around that they could sell, or even extra office space they can rent out. Doing this can help turn excess costs into profit for your business.
While it may be challenging, you should also evaluate your team. Look at their overall performance, analyzing billable hours against projections. Sometimes small businesses find that someone they hired for a specific skill is not getting the amount of work they planned for. In this circumstance, it might be best to find a contract employee or freelancer to use on a need-only basis.
Maybe you don't need to let anyone go, you just need to make effective use of your employees' time. Implementing productivity software can help cut your labor costs by using your employees time more efficiently. Project management applications like Basecamp or Asana can help organize tasks for completion and apps like Slack can help create smooth communication for all team members.
You should also review and make smarter use of your marketing dollars. Don't just look at your overall spend—instead, pay close attention to how much it costs to acquire each customer. With the hopes of cutting costs, many businesses just cut their marketing expenses. Instead, see if you can focus more on a niche audience tailored to your business. This will help lower your customer acquisition cost and give you a better return on your investment.
This may seem like a no-brainer, but don't forget to collect on accounts receivable. If you are borrowing money while you wait for your customers to pay, you are most likely paying excess interest. Experiment with ways to get that money in the door faster, such as retainers, financing options, deposits, or late fees. You could also incentivize your clients by offering quick-pay discounts to help better forecast cash flow so you're not struggling to pay the bills.
As a small business owner, your time is valuable—and so is the money you work hard to earn! Spend a little time reviewing your expenses to make sure that money is being put to the best use. Don't be afraid to enlist your employees and have them help you manage these initiatives on a routine basis. Your bottom line will thank you!