There’s no shortage of ways to cut small business expenses. The issue is, not every strategy works for every business. An independently owned restaurant runs very differently than the franchised day care center down the street — and has virtually nothing in common, on a day-to-day basis at least, with the sheet metal manufacturer across town.
But money is money. When you absolutely have to reduce the cost of doing business, you need to stick with what works for you. And you need to pursue strategies that are actually proven to work. These five apply to virtually all small and midsize businesses.
- Fire Your Accountant
Seems like a bad idea for a frugal business owner, no?
No one’s saying you should cut your human accountant loose and start doing your taxes blindfolded. Rather, you can save a boatload by outsourcing and automating your accounting work wherever possible. Look into top-rated cloud accounting platforms and lean on a human CPA for occasional strategic work — not day-to-day drudgery.
- Reduce Credit Card Debt With a Low-Interest Balance Transfer
If debt service is chewing up too much of your free cash, maybe it’s time for a new credit card.
Not any card will do, of course. Look for balance transfer credit cards with low or nonexistent introductory interest rates — known as teaser rates — that give you plenty of runway to pay down existing high-interest revolving debts.
- Use Contract Labor for Non-Core Processes
Small companies generally don’t need to hire high-priced professionals to handle non-core work. Positions that aren’t central to your company’s product or service lines, such as HR and legal services, are ripe for outsourcing to competent contractors who — though they expect and deserve fair pay and equitable treatment — don’t need spendy benefits packages, long onboarding processes, or messy separations should things go south. You can hire and fire them at will, and you don’t have to underwrite their healthcare plans.
- Consider Buying Items or Property You’ll Need for the Long Haul
Why rent when you can buy?
Well, because it’s cheaper upfront. A few years down the road…maybe not so much.
Never say never, but it’s generally a smarter financial move to purchase outright any durable goods whose service lives you expect to measure in years or even decades: fleet vehicles, plant machinery, maintenance equipment, HVAC stuff. Ditto for real estate.
- Negotiate More Favorable Vendor Contracts
You don’t know until you ask.
Even — perhaps especially — with vendors with whom you have long relationships built on mutual trust, you’ll want to drive a hard bargain when contracts come up for renegotiation. Why take the first offer when you know your negotiating partner is willing to go lower?
Every Penny Counts
As a small business owner, you probably know lean times all too well. The strategies described here won’t completely stave them off. But, as the old saying goes, every penny counts. It’s time to roll up your sleeves, sharpen your paring knife, and figure out just what you can stand to cut.