If you’re a business owner, you may be looking for ways to reduce your business costs. Whether these are one-time expenses or fixed costs, spending less means more profit. Read on to discover how to gain control of spending with our top cost-cutting tips.
Cost Reduction Strategies
- Get Organized & Know Your Numbers
- Set Tight & Realistic Budgets
- Shop Around & Negotiate with Vendors
- Explore Other Business Locations
- Hire Smart – Consider Using Freelancers
- Cut Monthly Memberships & Subscriptions
- Control Fuel Costs
The above seven cost-cutting strategies show some of the top areas to look for overspending. To begin, you’ll need to have a detailed accounting system so you can accurately track expenses. Make sure you know all the money coming in and where it’s going. If you don’t have costs broken down in enough detail – it’s hard to see where there’s waste.
Get Organized & Know Your Numbers
Check with your accounting department, bookkeeper, or even office manager and see how detailed the expenses are. If too many are lumped together in “office supplies’ or, worse yet – miscellaneous, get them categorized correctly. Once that’s done, it’s time to dig in.
Look at your profit and loss statement and review the expenses. Notice any areas that seem high and could be wasting money.
And if you carry inventory, check to see if too much or too little is on your shelves. Are you spending too much on inventory that just sits there? Or are you losing business because you run out of supplies?
Set Tight but Realistic Budgets
Once you’ve gone over your profit and loss, set a budget for each department. See what works best for you, whether it’s a monthly or quarterly budget. Make sure your staff is responsible for staying under budget and reward them when they do.
Train your staff so they aren’t shy about asking for discounts. Offer them an incentive for any savings they can negotiate. When they deal with vendors, make sure they get everything in writing, and once they’ve gotten the best deal possible – turn it in to you with proof of savings.
Shop Around & Negotiate
It’s easy to get busy and use the same insurance carrier, phone company, fuel provider, and raw materials vendor. But you could be losing tens of thousands of dollars every year by not shopping around. Make a list of all your major expenses and ensure these are shopped annually and possibly quarterly. Comparison shopping can apply to large purchases or even smaller purchases (for example, office supplies). Don’t rely on one place just because they’re convenient. Plan and get the best deals.
Be aware of all annual contract expiration dates. Keep a calendar of when each vendor contract is due to expire. Two months prior – start shopping. You want to make sure you have time to switch before any contract automatically rolls over. Some of the main contracts to keep an eye on are:
- Liability insurance
- Workers’ compensation
- Cell phone
- Leased office equipment
- Leased vehicles
Explore an Alternative Place of Business
Whether you own or rent your business facility, it’s a good idea to keep an open mind as to the best location. If you find that your overhead is high because of the site, see if there’s a less expensive option. Especially now, with so many businesses going virtual, it could be easier to negotiate lower lease rates or even purchase prices on a facility.
If you don’t need a physical location – but have one, consider having your business go virtual and your team going remote. Although it may not work for all companies, there may be possibilities where some staff are on-site, and others are remote. That could mean a smaller space and less overhead. And when it comes to meetings, utilize video conferencing instead of travel.
Hire Smart & Consider Freelancers
Building a solid and dedicated team is vital for the success of any business. That’s why it’s essential to hire the right people. Make sure you have a thorough vetting system. Taking longer to hire can mean you don’t have to fire.
Consider the possibility of hiring freelancers for administrative positions like HR, marketing, and accounting. If they work out well, you could always bring them on as an employee down the road.
Cut Monthly Memberships & Subscriptions
It’s easy to sign up for the latest online subscription you don’t feel you can do without. But later, what happens? You don’t use it, and in fact, you forget you’re paying for it every month.
Make it a habit to go through your bank and credit card statements monthly and question every single expense. Get rid of those memberships and subscriptions you don’t use.
Control Fuel Costs
Fuel expenses can be a large part of your overhead. The team at Ricochet Fuel is here to help you save on fuel, cut waste, and get rid of fuel theft. We can set up fuel use tracking, so you’re in control of who is using your fuel in what vehicle. And with fuel delivery, you’ll save money because you won’t be paying your staff to make runs to the gas station.
Ricochet Fuel is Here to Help
Since 1988, Ricochet Fuel Distributors, Inc. has been supplying bulk fuel. We service Texas and the surrounding states of Arkansas, Louisiana, New Mexico, Oklahoma, Georgia, Iowa, Kansas, Missouri, Ohio, Pennsylvania, South Carolina, and Wisconsin.
We’d like to make you one of our satisfied customers too. Contact Ricochet Fuel today.