4. Research the best prices for services
There is a huge range of prices for services like banking, phone service and internet. These variable costs are the major portion of their expenses for some businesses.
That’s why it’s very important to compare costs and ask many questions about what you’re getting for your money. Also, resist the temptation to get bowled over by salespeople – you don’t want to pay for features you’re not going to use.
For example, you might want the fastest internet service package you can get, but does your business really require it? If you have an internet-based business, it might be worth the higher cost, but if you’re only going to use it for sending some emails and invoices, you probably don’t need the extra speed and bandwidth.
Conversely, you also don’t necessarily need to go for the lowest cost option either — the key is to find value for your needs. Suppose you find an inexpensive bank, but maybe they don’t have all the services you want or any other bank account extras. Paying a little more but receiving some perks and banking initiatives may be more worthwhile.
This is an ongoing process. To keep your business cost reduction strategy going, check in with these service providers once or twice a year and ensure you are still getting the lowest rates available.
5. Don’t overpay for insurance
Many small business owners spend too much on insurance premiums because they’re paying for coverage they don’t need.
The best commercial insurance for small businesses is not a one-size-fits-all policy. Instead, try to find a less expensive option where you can tailor your insurance coverage to your specific industry and needs.
Most insurance companies also offer bundling discounts. So if you need different kinds of coverages like general liability or commercial property, you can buy them together for a discount. (FYI, this particular coverage combo is called a “BOP” or business owners’ policy.)
Evaluate your coverage needs and get quotes to get an idea of where you can cut costs without losing protection.
6. Change up your marketing strategy
Word-of-mouth has always been the best and most affordable marketing method for many small business owners. Now social media lets you kick it up a notch with minimal spending.
You might be paying for local advertising in newspapers or direct mail, but do a serious calculation: how much does your traditional advertising actually bring in, and how much does it cost?
While you don’t have to switch to online completely, it might be time to take a serious look at social media marketing resources like Facebook, Instagram and others. You also might consider non-social media advertising through Google business profiles or review sites like Yelp.
7. Consider your staffing needs
Employing people comes with a lot of necessary expenditures. Depending on your business, it may be necessary to have someone working for you in-house. Other times it may be simpler and more cost-effective to pay for help as needed.
For example, most early-stage startup small business owners don’t need a full-time accountant on their payroll. Instead, they might have a part-time accountant or outsource monthly or quarterly tasks.
Freelancers can also fill other gaps in your operations and keep costs down. Many business owners hire IT professionals, HR specialists and marketers to handle tasks instead of employing them full-time.
8. Invest in your employees
Watch for signs of employee burnout, overwork and boredom — you’ll end up paying more to recruit and train new people when your best employees leave.
Instead, consider offering them the chance to learn and implement new skills using sites like Udemy and Coursera. Many kinds of online training offer the opportunity to learn in-demand skills for lower prices.
For example, if an employee is interested in graphic design, you might have them attend training and help you with website and marketing efforts.
They’ll get exciting new challenges, build their resumes, and expand their responsibilities, and you’ll make the most of your resources.
9. Take advantage of discounts and ask for them
Everyone loves a good deal, so be on the lookout for programs or opportunities to save. Suppliers and local organizations of all kinds may offer business savings programs. Similarly, maybe there is a time of year when a retailer offers a large sale — you may choose to stock up during that time frame.
And it’s not just local businesses; Staples and Office Depot both have discount or reward programs. You may also be able to get discounts from local businesses through your chamber of commerce.
You can also try negotiating with your vendors. For example, you can partner with another small business on a bulk discount to net some cost savings.
10. Re-evaluate your workspaces
What is essential, and what are “nice to haves”? Start with your workspaces or office. Could you get by with a smaller office or a space that’s in a less expensive location? Do you even need an office? Could you get rid of some things, operate with less on-site inventory or see if employees can work remotely?
A smaller space (or no physical space) could lower monthly costs and dramatically reduce fixed overhead. You might also try negotiating with your landlord for lower rent as the pandemic opened up more commercial vacancies.
11. Review cash flow regularly
Set a schedule to look at your finances and determine which products and services bring in the most money and what’s costing you the most. You can opt to monitor and manage cash flow weekly, monthly, or every quarter, whatever works for you.
Even if only temporarily, limiting yourself to your core business can be one of the most effective cost reduction strategies.
Protecting your business with NEXT Insurance
These are just a few cost reduction strategies for you to consider. Keep a close eye on your spending, and you can find even more ways to reduce business expenses.
One way is by purchasing insurance through NEXT. We are a one-stop shop for getting small business owners the right insurance at affordable prices. Since we only help entrepreneurs like you, we can create a customized insurance package tailored to your exact needs.
We’re 100% online, so that helps keep costs down. You can get an instant quote, review options and buy coverage in less than 10 minutes. And you can get immediate 24/7 access to your certificate of insurance (COI) as soon as you buy your insurance.
Get an instant quote today.