The best small businesses understand how to operate efficiently and work quickly. Being able to save money and generate real profits can make all the difference between needing to raise external funding and maintaining ownership of your company. Furthermore, profitable companies are able to run lean, think on their feet and adapt to evolving market conditions. This is a critical skill for a company of any size.
One of the greatest ways to work towards being cash-flow-positive is to find clever ways to cut overhead and administrative costs. There are likely many places where you could save money that would vastly reduce overall expenses. Here are five ways, specifically, that you can save money and cut costs in 2018:
1. Evaluate all software spend.
In today’s digital economy, software runs the world. Technology empowers business to succeed. As a result, small businesses find themselves spending a significant budget on software services. There are countless products and services that you likely depend on to interact with your customers and manage your business. There are two important things you can do, in relation to your software services, that can dramatically improve your top-line.
First of all, there are many ways to implement software that helps save your employees time. For example, if you are giving an employee $60,000 a year and they are spending a quarter of their time on a task that can be automated with a $5,000 product, you would save $10,000. Staying up-to-date with the latest products and trends will keep you informed when there are options to streamline your business.
The other important point with software is that you should take a hard look at all of your expenditures, as subscription services tend to add up. According to cloud mining firm BET Capital’s Ben Hortman, “Just because something is valuable does not make it worth what you are paying for. Plus, in most verticals, there are many companies that offer close to the same thing. It is, therefore, worth your time to evaluate all of your products. You can see if these are worth the costs and if there are cheaper alternatives available.”
You can also save money by negotiating deals. Many people tend to take online pricing numbers as fixed. A vast amount of products, especially those with larger contracts, can be negotiated down, though. In addition, if you know that you will be using the service for a year, you should save the money that comes with an annual contract as opposed to paying month over month.
Whenever it makes sense, you should contract out work that is not a core competency of your business. It is easier today than ever to find good freelancers. Plus, it is much cheaper than hiring full-time labor. If you need a particular page designed or a feature built, there are many times when it will be cheaper to contract that work out as opposed to hiring a new employee.
This also saves time and energy that would otherwise be focused on your employees. As a manager or CEO, it is your responsibility to make sure employees are happy, growing and productive. Fewer people on your full-time staff means less time focused on monitoring them.
3. Be more Diligent with Recruiting and Hiring.
Recruiting new employees is one of the hardest parts about building a business. Extremely competent people can be tough to find and they tend to demand top dollar. One of the best ways around this is to work harder than other hiring teams.
A benefit of running a small company, versus a slow-moving conglomerate, is that you are likely only hiring one or two people at a time. That means you can take a more personal approach to recruiting. You can use your network to find high-quality talent. Doing so will enable you to find better people. Higher-quality employees will give you higher output. That will, consequently, save time and money.
A great place to look can be universities. There are many competent and smart students graduating each year that can be paid less money. Although their training might require more work, if you can find a fast-learner, hiring a recent grad be a great way to find good talent at a cheap dollar.
4. Cut Down as Much as Possible on other Expenses.
Outside of your software spend, your business is likely paying for a variety of other things. This could include office rent, utilities, travel expenses, food, company outings and more. A great way to cut back on spend is to analyze all of these costs, independently. For example, you can try to negotiate rent with your landlord, or you could consider moving into a coworking space.
You should also encourage frugality within your company. You do not have to make it seem like you are sinking in order to do so. Instead, just make sure people realize that they should be thoughtful about the ways in which they spend money.
It is even helpful to encourage this saving for your employees’ personal lives. Helping them save money will make them happier and it will make them more money-conscious. You can encourage things like comparing car insurance options, for example.
You can also find online resources to help you compare different offerings and save money. If you need a visa to travel to another country, for instance, you can use Travel Visa to compare pricing options.
5. Hire Interns.
If you have the bandwidth to manage them, interns are one of the greatest resources. Although they know less, they require significantly less money. You could get two or three interns for the price of one full-time hire. If you recruit well, this can be a great way to get high-quality work done cheaply. Plus, you could end up hiring your interns in the future.