By Jennifer Welford
As your small business grows, your expenses are likely to increase, too. Bloomberg reported that 80% of businesses fail within the first 18 months of operation. With so many businesses facing administration before their second year it’s more important than ever for small business to control costs.
As specialists in small business accounts, Cottons Chartered Accountants have compiled a variety of top tips on how to cut your business costs and keep unnecessary costs down.
1. Go Green
Energy arguably accounts for the most significant costs incurred by most businesses, so reducing energy consumption by just a small fraction and becoming eco-friendly you can save your business a lot of money.
There are several ways that business owners can increase their energy efficiency, such as reducing paper waste, installing insulation, using renewable energy and making use of LED lighting. It’s also advisable to speak with a professional who can assess the efficiency of your business’ premises to pinpoint where improvements can be made.
2. Buy Second-Hand
Recycling is also a great way to keep costs down. The digital world is constantly evolving meaning technology is developing all the time. It can be tempting to purchase the latest gadget; however, unless it is necessary, choosing slightly outdated hardware, machinery and other specialist equipment is often far more affordable.
Furthermore, when building an office and buying furniture companies such as eBay and Gumtree are a great way to keep costs down by purchasing second-hand items.
3. Consider Cloud Computing
Businesses frequently spend extensive amounts on specialist software and peripheral software necessary to perform their respective trades. In addition, membership fees have continued to soar year after year including license renewals, updates and repair costs.
It’s possible to save some of that money by making use of cloud computing, an innovation that allows users to run applications remotely and store data in the cloud for all business purposes. Cloud software frequently offer subscriptions that tend to be significantly less expensive than the traditional software packages that preceded them. Furthermore, cloud applications can help businesses to reduce their overhead costs by allowing employees to work from home or other remote locations.
4. Make Use of Tax Breaks
Decreasing a business’ tax obligation is considered the most efficient method of improving their bottom line. In simple terms this means taking advantage of as many deductions as possible. In order to do this effectively, it’s strongly advised to get into the pattern of monitoring every business expense by keeping receipts and practicing good filing and bookkeeping methods.
5. Prioritize Your Time
The majority of fast-paced business proprietors will be all too familiar with time constraints, and typically small business owners have more responsibilities to shoulder. Entrepreneurs need to spend their time wisely and concentrate on aspects that will see the most return. Prioritizing work is hugely important and when combined with successfully delegating work it can have a large effect on saving (and making) money.
6. Negotiate Interest Rates
It’s common for small business proprietors to use credit cards in order to inject their cashflow, make small purchases or take business trips. However, the fact that it’s possible to negotiate a lower APR on credit cards is less widely acknowledged but can ultimately save business owners substantial sums of money.
7. Cut Supply Costs
Whilst bartering with credit providers is effective, negotiating with suppliers is also hugely important and can hugely affect profit margins. Suppliers are even more likely than lenders to agree to a reduced deal to gain regular clientele.
For more tips that will help you cut costs and boost your bottom line, review these tips on how to increase profit margins.