Like most people, you’re always looking to know how to successfully cut costs and save money. But sometimes, it can feel like an uphill battle. You try to cut back on your spending, but there are always new expenses that pop up. It doesn’t have to be this way, though.
There are many ways to cut costs without sacrificing quality or lifestyle successfully. Here are 30 tips from experts that will show you how to successfully cut costs:
Why and How To Cut Costs
As a small business owner, it is important to focus on your net profit margin. This metric provides insights into sales and revenue trends, allowing you to identify weaknesses in your business. By paying attention to this number, you can make changes to improve your bottom line.
While top-line sales are important, net margins are just as important because they illuminate your revenue and expenses trends.
A few variables can affect your net profit margin, but as a business owner, you have some control over them. One of the most important factors is your expenses. By keeping a close eye on your spending, you can help ensure a healthy profit margin.
While you can’t directly control what customers spend, you can cut costs. The key is knowing what you can cut and how much you can safely do so.
The SBA reports that half of all businesses will fail within their first five years.
While business owners tend to focus primarily on generating more revenue, cutting costs is just as, if not more, important.
Making cuts in your spending doesn’t mean making painful choices or altering your long-term business plan.
These tips are used by many many businesses to cut back on costs, improve efficiency, and increase profits.
Tips on How to Successfully Cut Costs
Here are tips that will help you cut costs and maximize your profits:
1. Examine all of your business’s expenditures, even those that seem insignificant
If you aren’t already tracking your spending, you need to start doing so immediately.
Good accounting tools help you categorize your expenses and reduce them, such as by negotiating better rates with suppliers.
Sometimes, we overlook smaller, seemingly insignificant costs that can add up over time.
2. Identify unnecessary expenses
Small business owners often spend more than they have to on office supplies, marketing, and payroll.
He suggests taking a close look at your budget and ensuring that all of your costs are necessary.
For instance, maybe you have a subscription to an old, unused publication.
Take a look at all your expenses and see which ones you can eliminate.
3. Use Pareto’s 80/20 principle
Pareto’s 80/20 principle is a powerful way to increase your income while limiting expenses. By focusing on the 20% of activities that generate 80% of your income, you can cut down on wasteful spending and increase your overall profitability.
The 80/20 rule is also known as the 80/20 Principle. It states that 80% of results come from 20% of activities.
4. Cut expensive traditional advertising and try some low-budget alternatives
While traditional forms of marketing such as newspaper ads and billboards can be quite expensive, online advertising can be cheaper. Try using platforms like Google and Facebook to reach your target audience.
You can target audiences by location, age, and demographic. This can help you reach the right audience and get a good ROI on your marketing.
5. Be a good neighbor
By working with other businesses that sell complementary products or services, you can save money by sharing advertising costs and buying together. You can also share distribution, marketing, and supplier channels.
6. Partner with other businesses for marketing
Consider partnering with companies that sell similar products, such as DTH boxes, and bundle your products together. This will save you on marketing and promotion costs.
It’s important to make sure that the client benefits from the relationship just as much as you are.
7. Don’t just think about the money, barter
When your cash reserves run dry, consider turning to one of the oldest forms of commerce: trading.
Accountant, Priya Mathur, used her accounting skills to barter for office design when she needed a remodel.
A no is the worst possible response, and you may be surprised at how quickly you hear a “yes.”
8. Consider Cloud computing
Cloud computing can help save both time and money. With employees working from remote locations, they can collaborate using cloud-based tools.
There are a variety of cloud applications that businesses can use, such as DropBox, which allows users to store and share documents, and ProfitBook, which manages business accounting.
9. Go green to save the green
According to the author, ‘Going Green’ is not only great for your public relations but also your profits.
1. Always turn off your electronics when you’re not using them.2. Consider replacing your printer with a model that can print on both sides of a page. This will save you money and reduce waste.
Because most green practices are designed to reduce energy usage and pay an energy bill, if you reduce the amount of time you spend on energy-intensive activities, such as washing clothes, you will reduce your energy costs and your carbon footprint.
10. Hold virtual meetings
Instead of traveling to meet with clients, consider connecting with them via Skype. You can meet with them without leaving your office with video conferencing, saving you time and money.
We push for video conferences for the first meeting, even if they’re in the same town. However, all follow-ups can be handled via video chat.
At Profitbooks, we use an online meeting software called zoom to give demos of our products. This gives us the ability to share our screen with our clients and show them how to use the application.
11. Consider using Open Source Software
You can save a lot of money by using open source instead of proprietary software. When purchasing laptops for your team, you can opt for those without Windows operating systems.
Open-source operating systems such as Linux and OpenOffice are cheaper than their proprietary counterparts.
Using open-source software is an affordable way to save money. It’s easy to use, and it’s free.
12. Consider reducing the number of landline phones
If your business is still using a traditional phone line, it’s time to consider switching. Landline phones are no longer necessary.
Mobile phones are cheaper than traditional phones, offer more flexibility, and are more mobile.
Cloud-based phone systems allow you to transfer calls from one number to another.
13. Buy used equipment
Buying second-hand items can save you between 50-70% of the cost of buying new ones. You can negotiate with sellers directly and often get a better deal.
If you’re not keen on buying new equipment, consider checking out local classified ads for great second-hand deals. You never know what you might find!
14. Consider pool purchasing
These days, it’s common for groups of buyers to get together and negotiate deals with builders. You can also find other business owners and form a group to pool your resources together.
Importing products from other countries can be a great way to save money on items you need. For example, Delhi-based electronic store, MrNarang, imports its products from countries such as China, Taiwan, and Korea.
By working with 7 other suppliers, Mr. Naran can import his products into India at a much lower cost than he would do on his own.
15. Remember to ask for a discount
Many major companies will sometimes offer discounts to small businesses; you have to ask.
Some phone companies will even give you a discount if you pay your monthly bill on time. Just ask!
16. Avoid buying in bulk
However, it’s not always good to buy supplies this way.
For instance, if you bought 100 ink cartridges at once, your cost per cartridge will be lower. But you have to ask yourself: How quickly will I use up 100 cartridges?
You’re much more likely to lose the cards or find them ripped up before you get a chance to use them.
As a small business, you can save money by only buying what you need right now. This will improve your business’s cash flow and help you save more money in the future.
17. Track your inventory closely
If you manage an inventory-based business, it’s crucial to monitor your stock levels closely. You can avoid tying up too much money in inventory and keep more cash flow available.
If you currently manage your stock by hand, investing in inventory management software may be worth investing in. This can help ensure that you never overspend on items and always have enough in stock.
18. Be very assertive with past due accounts
Call customers who haven’t paid their bills on time. Follow up with them and remind them to pay.
If you’re having a hard time getting your customers to pay, you must be assertive and convey your sense of urgency. Some customers are surprisingly quick to release payment if you handle it right.
19. Sell online
By now, you’ve probably heard that e-commerce is big business. Building your online store was a lot of work in the past.
Setting up a seller account on eBay, Walmart, or Etsy is easier than ever. You can even use services like Fulfillment by Amazon (FBA) or Shipwire to stock and ship your products.
Opening an e-commerce business is a great way to save money, especially compared to traditional retail businesses. You can set it up from a small office, so it’s a great option for new business owners.
20. Be reluctant to offer credit
Before offering clients extended payment terms, check to ensure they have a solid credit history. Only extend terms to clients who have a proven track record of paying their debts on time.
For less than trustworthy accounts, it’s recommended that you collect payment upfront, ship a partial order, ask for a letter of credit and a personal guarantee, and ask for a pledge to their assets.
Just try your hardest to delay your offer of credit to your prospects.
21. Consider restructuring your loans.
Talk to your bank if you’re having trouble making your monthly loan repayments.
Most lenders will give you the option to temporarily stop your EMI payments or structure your repayment schedule to reduce the total interest you pay.
Alternatively, you can shop around for lower interest loans from other banks and increase your liquidity.
22. Hire and train fresh graduates
Hiring experienced salespeople isn’t cheap, and more and more tech companies are hiring recent college graduates and training them for only a few months.
It is more cost-effective to train fresher employees than to hire experienced ones. In critical work scenarios, you have no option but to go for experienced people, but in most cases, the strategy of training freshers works well.
There are several benefits to training fresh college graduates for your company. You will save on salary costs by hiring entry-level employees. Still, you will also have employees who are excited about their work, familiar with the latest technology, and willing to learn new things. Fresh college graduates can be a great asset to any company if given the proper training.
23. Hire Interns
A financial consulting firm, Finko, suggests that you hire an intern. Interns normally work for 2 to 6 months, depending on the requirements of their school.
Interns have a lot of enthusiasm, and many tasks can be assigned to them, such as filing, data entry, and scheduling.
“At Finkoi, we love to hire interns for market research from sites like OysterConnect! We find that engaging them for 2 months is the perfect amount of time to get some great insights.
Interns can sometimes add value, and if they are, you can always hire them as permanent staff members.
If you’re looking to know how to successfully cut costs without sacrificing quality, these tips from experts will show you how to do just that successfully. From finding ways to save on your groceries to cutting back on unnecessary expenses, there are plenty of ways to trim your budget without making major changes. So start putting some of these tips into practice and see how easier it is to stick to your budget!
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