If you run a small business, you're probably aware that the less you spend to keep that operation running, the higher your profits stand to be. As the new year kicks in, it's a good time to rethink your business budget and come up with ideas to cut costs. Here are a few ways to start.
1. Staff according to need
Many small businesses see peaks and lulls in their workflow, which means that if you're maintaining a larger full-time staff so they're around for those busier periods, you could be throwing money away. That's why it pays to consider a staffing model where you're paying for workers according to your business's specific needs. If you currently have a staff of 80 full-time employees when you only need 65, ask around and see who might be willing to go part-time. You never know when an employee might be looking to go back to school, pursue a side venture, or simply have a better work-life balance, which means you might get some eager volunteers to cut their hours, thereby making the process painless for everyone involved.
Another option? Consider replacing some permanent employees with freelancers. Though you might end up looking at a higher hourly or project rate, the benefit is being able to pay as needed, and only for work that's actually produced. And since you're not required to offer workplace benefits to freelancers or pay part of their Social Security taxes, you might find that those savings outweigh whatever higher hourly or project rate you're charged.
2. Allow more employees to work from home
Many business owners fear the work-from-home arrangement, since it means having less direct oversight over employees. But if you're willing to let some workers do their jobs remotely, you might save a bundle in the process. Having staff members who telecommute might allow you to downsize to a smaller office space, thereby saving you money on rent and other overhead, like utilities. It might also create a situation where you don't have to purchase or maintain quite as much business equipment.
3. Negotiate with vendors
Many businesses rely on outside vendors or suppliers to operate. If you've been a loyal customer for quite some time, it never hurts to revisit the contracts you have with your vendors or suppliers and ask for a better rate. Along these lines, try consolidating certain services for a more favorable deal. For example, if one company does your bookkeeping and another does your payroll, you might find a single company that's willing to provide both services and give you a break on each one's cost if you sign up for both.
4. Go paperless
Generating physical reports and invoices costs money, as does mailing them out. Implementing an electronic billing system for clients can therefore save you a chunk of money while simultaneously helping the environment. Storing important documents electronically can also help you avoid sinking money into physical storage.
5. Focus on online marketing
Those billboards you see advertising local businesses? They cost anywhere from $1,500 to $4,000 in small to midsize cities, and $14,000 or more in larger cities. In fact, generally speaking, print marketing costs a lot more than its online counterpart, so if you're looking to cut costs, try focusing on the latter. You can advertise on social media, invest in Google ads, or even drive traffic to your business's website organically by producing search-friendly content.
Reducing your operating costs will put more money in your pocket in 2019. Follow the above steps, and with any luck, you'll find yourself a bit richer in the new year.
The $16,728 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.