When faced with a cashflow crisis, business owners may end up taking out a loan or cashflow advance. Though a good option, the answer could lie in unnecessary or inefficient spending. Dialing back spending in some cases is a relatively easy fix that will immediately benefit the cost of operations. Getting the ball rolling can be difficult, so we put together a comprehensive list of ways to start cutting unnecessary spending.
POWER DOWN THE WORKPLACE
An easy place to start when trying to cut unnecessary costs is in your power usage. Even small businesses can reap benefits from simply powering down the office after hours. Shutting down a computer before leaving will save at least $60 a year, which with companies that run many computers, can save thousands. Another misconception is that leaving cheap inefficient appliances running at all hours won’t cost you—wrong, these appliances slowly drain power all day. Replacing appliances with efficient alternatives or at least powering down every night will chip away a noticeable amount of your energy bill; EnergyStar approved appliances with power saving functions will cut anywhere from 10-50% of your power bill. Lastly, cooled (and heated) air is wasted through old window and door frames through leakage; getting seals checked and replaced will cut your power bill down by 5-10%.
ALLOCATE EMPLOYEE TIME WISELY
Next, money is wasted when having staff just sitting around during down time. By just utilizing part-time employees during rushes, salary costs will dramatically drop. In essence, part-time employees should only be used when needed.
SEARCH FOR NEW LINES OF CREDIT
When starting up a business, owners tend to rush into a business credit line without fully researching their options, or their personal credit disqualifies them from lower rates; this creates higher rates. Assuming that the business is paying off all lines of credit in a timely manner, after six months the business owner should talk to their current provider about qualifying for lower rates and comparing them with the competition.
ALIGN INTERNET AND CELLULAR PLANS WITH USAGE
Align a business’s cellular and internet usage plans with the firm’s actual usage. Of course, there is no way to know exactly how much data or bandwidth you will use each month, however, when in doubt, always pay for more rather than less as overages can cost an arm and a leg. To begin, monitor your monthly usage and ensure that as a company, you are enrolled in the most cost efficient plan possible.
ASK FOR BULK-BUSINESS DISCOUNTS
As a business owner who is buying in high volume quantities, everything is negotiable; distributors and sellers incentivize buying in bulk because the profit margins are greater on their part, meaning that you can get a significant discount on all of your purchases. Forming purchase alliances with other local businesses is a great option to make use of bulk discounts on everyday products, such as bottled water and paper. Like purchase alliances, marketing alliances are another way to cut costs and increase possible ROI; through a joint promotion of complimentary products to split advertising costs and increase potential customers.
LEVERAGE WORD-OF-MOUTH MARKETING
Reduce traditional lines advertising which, in many cases, isn’t as effective as possible and can be difficult to measure. Asking your customers to help spread the word of your business is an extremely effective and free form of advertising. Word-of-mouth marketing is a powerful and free tool that every business needs to leverage. Simply asking your loyal and satisfied customers to review your business on Yelp or Facebook will only benefit your business – it will increase your rank on Google, which generates more interest from potential customers. Additionally, using social media to interact with loyal and potential customers is also an invaluable tool, as it gives your business a human face and allows people to relate with your product/service and core beliefs. An active community on social media is especially important because user activity shows up in their friend’s feed – friends who just might become customers.