The start-up environment often calls for entrepreneurs to be lean and frugal in their operations. Runaway budget costs can kill your dream before the business even gets off the ground. However, cost-cutting is easier said than done.
You may not wish to starve off your sales department. Prospecting is key to netting new clients for your newly established company. Additionally, core operations that allow you to provide your service or products to customers should be left untouched. Here are seven ways that you can reduce your spending for your small business.
Downsize or Consider Shared Office Space
Entrepreneurs often face a hard choice between providing a conducive working environment and maximizing office space efficiency. Your lease or rental expenses may contribute a significant portion of your strained budget.
You can cut on the costs by opting to downsize or opt for virtual office spaces. Companies such as physicaladdress.com offer flexible rental options for executive suites in prime locations. With most firms embracing remote working, co-shared offices may provide an excellent solution to your ballooning rental expense.
Review Your Subscriptions
Most businesses use multiple tools and services that promise to streamline their operations. However, the subscriptions to some non-essential tools can lead to your overhead costs quickly getting out of hand.
You may need to review your operating expenses. If you rarely use the CRM software you subscribed to, consider cutting it off until your bottom line improves. You can also negotiate to convert most of the services from fixed payments to pay-as-you-use models.
You should consult your staff to determine the products or services to discontinue. If you love a product but cannot justify spending extra cash on it, you can reach out to the service provider to learn if there are any less expensive options.
Outsource Non-Core Operations
Hiring, training, and retaining talented staff can be prohibitively expensive. You can consider outsourcing tasks that do not warrant the need for a full-time employee but can’t fit in your already full plate.
You can access many outsourcing platforms to find a talented pool of experts from all over the world to handle your tasks. Freelancers can keep your labor costs under control as they may not require paid vacations, pre-tax retirement accounts, or health insurance benefits.
Alternatively, you can hire interns to work for your firm. In their quest to gain work experience, interns may provide high output at a fraction of the cost of hiring a full-time staff. Moderate compensation benefits can help you lower your labor expenses.
Shop Around for Utilities
You may also need to review your utility bills. From power supply to internet connectivity, you may need to stop paying for more than you require.
Shop around to identify other options and packages that you may have. You can also invest in energy-saving products such as lighting and printers to reduce your energy consumption.
Retain Your Talent
It can cost you a lot more than you think to attract new talent to your start-up. Research indicates the hiring process can set you back anywhere between a half to two times the employee’s annual salary. As such, you may want to retain talented employees whenever you can.
An increasingly competitive marketplace means that your staff may receive attractive offers from your competitors. You may have to incur additional costs in salaries and benefits. Alternatively, you can renegotiate with your team with equity share bonuses for targets attained instead of salary increments.
Cut Down on Your Travel Costs
Advances in telecommunication technologies provide an alternative to business travel that can dramatically increase your operating expenses. You can utilize a variety of teleconferencing software to conduct meetings with your remote workers.
You can hold your presentation or pitches over a video chat service and save hundreds of dollars that you would incur in sending a representative to the location. If you have to travel, let it be for revenue-generating activity.
Switch to Cloud Storage
Legacy systems can be costly to maintain. You can opt to go paperless and deploy a cloud computing service to store all the information for your business. Cloud storage allows you to access data from any device with the correct authentication details.
Additionally, cloud storage may allow your staff to access documents while participating in a teleconferencing call. The redundancy systems mean that you do not have to worry about data loss if your computers crash.
Lack of adequate cash flow remains one of the top reasons most small businesses never make it past the fifth year. You can protect your business by spending money wisely on essential products only. The seven tips highlighted may provide a baseline from which you can start your frugal expenditure.