With the lingering moments of 2022 and a new year impending, let’s take a moment to reflect.
This year was, to put it mildly, difficult. Can you relate?
Inflation’s chokehold … supply chain woes … more policies coming out of Congress … SBA business loan craziness … all of this made it difficult for all of us at the helm of our own businesses.
Those challenges left some of our clients searching for strategies to keep their small businesses afloat and sailing ahead, too.
Find yourself in those waters? (Forgive all my nautical wordplay.)
When the cash flow is getting thin, the only option left is to figure out how to cut business costs. That’s something almost every business goes through at one time or another.
So, here’s what I want to reassure you with:
Looking at your business and realizing some things need to be restructured in order to save money? It’s okay. Maybe you’re facing the reality of having to pay off EIDL loans. Maybe the economy’s instability has just caught up to you (the way it has with everyone).
Whatever the pressure point may be, the good news is there are ways to efficiently cut business costs and save your business money without having to lay off any of your rockstar employees.
If you haven’t already considered these options to cut business costs, maybe it’s time to…
1. Cut production costs. Do you have unused space — whether a tiny office or an entire warehouse — that could be rented out? Moving to a coworker space can also be beneficial for salespeople, managers who regularly travel, and small businesses with some employees working remotely. If there isn’t a high demand for the space you occupy, perhaps you could even negotiate a lower rent. In terms of materials — you might be able to sell leftover cardboard, paper, or metal instead of sending it straight to the recycling center. Or better yet, could another product be created using that waste?
2. Cut costs on financial accounts. Do you have insurance policies or bank accounts that should be consolidated? Look over your insurance policy to make sure you’re not over-insured. If other lenders or insurance providers offer a more competitive rate, ask your provider to match it.
3. Optimize your marketing. Take the time to form and maintain solid relationships with customers, and you’ll be able to spend less money on ads. Build your email list, set up a referral program, and regularly get referrals from happy customers.
4. Spend less time in unnecessary meetings. Schedule predetermined times for meetings, and send an agenda ahead of time. Clearly communicate that you expect participants to arrive on time and be ready to stick to the agenda.
5. Narrow your business focus. This can be done two ways: Hone in on the types of services you offer, so that you can produce high-quality work quicker — or subcontract work when possible. This leads to more revenue at a lower expense.
6. Maximize your employees’ skills. Do you have someone working in sales who is much better at design? Of course, employees are often responsible for several areas, but moving a person to a role that deploys their strengths will make them more efficient (and happier, as well).
7. Examine all your monthly bills. Should you replace a vendor with a more affordable one? Are you renting out more space than you need? Do you need to spend that much money on food? Do you have recurring subscriptions that you don’t really use? If you are a longtime customer, your current vendors may be open to renegotiating your contract or offering discounts or add-ons. Or Walmart, Uline, and Amazon Business may have lower rates for office supplies than what you’re currently paying.
BONUS TIP: Get creative. Ultimately, the best options depend on your individual business and the market you serve. Remember that increasing revenue is another way to compensate for high costs. Creative ways to increase revenue include promotional events, special sponsorships, or any other low-cost plan to get your business’s name out there.
Wishing you the best of luck this season as you find new ways to optimize your services as you cut business costs and keep that ship sailing. Don’t forget the subtle power of saving money on taxes, as well… No one wants to pay the IRS more than necessary — especially during these times.
If you want to review your business’s situation together and make sure we’re implementing all the possible strategies to save you money, I’m always here to chat:
In your corner,
Emelia Mensa, CPA