Wednesday, February 25, 2015

Keeping Your Small Business Costs Under Control

Easy Tips for Cutting Costs and Running Your Business Better

When it comes to running a small business, managing costs is often the key to having the right cash flow and an overall profitable company. As the old saying goes, “It’s not how much you make, it’s how much you keep,” and this could not be more true for small business. Good business owners know how important it is to manage costs but it can be difficult to do so – successful entrepreneurs review their financial state on a regular basis to identify cost structures that may be draining their business’ profits.

Review Your Interest Rates

Cut costs to improve
your bottom line
Many business owners borrow money to help start up their company and many times this funding comes with a very high interest rate. This rate can be due to a number of different factors such as high overall interest rates in the market or even securing funding with poor or adverse credit. Higher interest rates means you will be paying significantly more than you borrowed over time. After six months of successful repayment – on time and in full – you can apply for a lower interest rate to help lower costs.

Think Outside the Box When Buying Equipment

When you begin a new business, it does not mean you should go out and buy all new equipment to make it run. Restaurants, for example, go out of business every day and leave behind great, functioning equipment. Before running out and buying new, find an equipment broker and see what they may be able to sell you to furnish the business. The same goes for office equipment like printers and faxes and even some industrial or operational equipment – chances are, you can find it used.

Negotiate with Vendors

There is no harm in asking vendors or creditors to cut a deal based on the amount of business your company is bringing them, not to mention some vendors already have deals in place, like discounts for prepayment or lower rates for the higher number of items you order. Chances are, if you are providing a vendors with consistent, profitable business, they will be very likely to offer you some type of discount – the only thing holding you back from saving some money on inventory is asking for a break.

Share Office Space

Some small business are, well, small and do not require a lot of office space. If this is the case for your business, consider sharing a larger office space with another small business. This will definitely help to reduce costs for both businesses and, depending on the nature of each business, the employees of each can also share office equipment like printers, copiers, and faxes. By sharing all the costs, it can be mutually beneficial for both businesses without wasting any funding or office space that is not needed.

Manage Staff During Slower Periods

If you work in the retail business for any period of time, you should be able to identify peak and valley times for the business, meaning when the store is busiest and when it is not. During those times that business is slow, make sure to be proactive about cutting back on labor hours. Part-time employees are generally not eligible for any type of benefits and are used to having more flexible hours. Once you see a certain shift is overstaffed take a proactive step to send part-times home to cut back on costs.

*Photo Courtesy of frankieleon via Creative Commons License

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