Operating a small business is often an everlasting battle to keep your cash flow ahead of expenses. In fact, a SunTrust survey discovered that 75 percent of small businesses face cash flow fluctuations each year. And, if your costs aren’t in check, even a small change could bring doom to your business.
Even if you’re one of the few businesses with steady cash flow, cutting expenses where possible should be a priority. It doesn’t hurt to make your business more profitable, and you never know when unexpected cash flow problems will pop up. The following are ten simple cost-saving strategies that you can implement for your small business.
It’s imperative that you take a look through your expenses each month. You’d be surprised at what you’d find. Often, significant charges go unnoticed for months as they slowly drain cash from your bank account. You want to make sure you account for every dollar you spend.
Every three months, perform a deep-dive audit of the previous quarter. Identify areas of excessive spending and create a strategy with concrete action items to cut down on unnecessary expenditures.
It may seem obvious, but you need to create and follow a budget. When you audit your expenses each month and quarter, identify which categories you overbudgeted, which categories you underbudgeted, and why you did so. Even if all you do is budget and track your spending, you’ll likely discover significant cost savings within the first couple of months.
To help with this process, connect your business bank accounts to expense management software. Freshbook, Quickbooks, and Gusto are all great options. They allow you to split up your expenses into categories automatically and most provide useful documentation when tax time comes around.
Many small business owners wrongly assume that they need to hire a web developer to build out a website for their business. A quality developer costs anywhere between $35 to $150 per hour and can take several months to build your site.
Instead of hiring an expensive contractor for this work, consider creating the website yourself using a website builder. Website builders enable anyone to quickly, cheaply, and easily create a website – no programming experience required. With minimal training, you can create a website within days.
You have a wide range of website builders at your disposal. Some builders, like Squarespace or Wix, offer complete website templates in which you only need to change images and text while others, such as WordPress, provide you with full customizability. A few website builders (Unbounce is one) focus on tracking customer conversions and allow you to A/B test different layouts.
Most importantly, though, a lot of the available website builders use a freemium model in which you can use a scaled-down version of the builder for free. As you grow your business, you’re able to upgrade to get more features and still pay less than $100 per month.
Switching to a Customer Relationship Management (CRM) platform to document leads and clients could significantly reduce the number of employees you need on your sales force. CRM software makes your team more efficient by recording client notes, dates of contact, sales funnel steps, and other important information all in one place.
Marketing and sales are two sides of the same coin, so many CRM platforms also include, or integrate with, popular marketing tools.
The efficiencies that CRM software provides are unmatched. A 2014 survey by Nucleus Research discovered that companies implementing a CRM system receive a return on investment of $8.71 for each dollar they spend on the new software.
If you’re worried about additional spending in the short term, you shouldn’t fret. Many CRM software companies offer a free version or trial, so you can test it for your business to see if it’s a right fit before even paying a dime. Hubspot and Salesforce are two popular CRM platforms into which you should consider looking.
According to Zenefits research, the payroll process takes an average of seven minutes per employee each pay period for small businesses, Outsourcing your payroll with helpful software could bring down your total costs by almost 20 percent.
Other than bringing down your process times, outsourcing payroll and bookkeeping reduces your risk of paying penalties for noncompliance. The United States has thousands of pages of tax codes, so it’s difficult for a busy small business owner to ensure that the company is following everything to a T.
And you definitely want to stay compliant. The National Small Business Association reports that noncompliant businesses pay an average of over $30,000 in fines over five years of operation.
By leaving your complex payroll and bookkeeping to the experts, you minimize the risk of needing to pay those exorbitant fees. While outsourcing bookkeeping may cause additional expenses in the short term, it will save you an abundance of money in the long run.
As the digital marketing space becomes more crowded, advertising through mediums such as Google and Facebook are turning more costly and less efficient.
If you see the results of your regular marketing channels begin to plateau, don’t be afraid to test some “outside-the-box” ideas. Guerilla marketing techniques are challenging to make viral, but they’re usually inexpensive, so you can try out numerous creatives options to see what sticks.
Some businesses are even switching back to more traditional advertising like billboards due to their lower costs.
You can also reach out to other businesses to do communal advertising. Some advertising options when partnering with other companies include cross promotions, mailing list sharing, and referral deals, among others.
Exploring inboard marketing like search engine optimization (SEO) and blogging is another low-cost option. This strategy is especially beneficial if you’re in a niche or local market as those sectors typically have low keyword competition and a lack of written resources.
Moz and Ahrefs provide a bunch of free SEO tools and educational resources to learn more about what Google looks for when creating rankings.
Unless the website for your small business is receiving a monumental amount of traffic, there’s no need to splurge on premium website hosting or a dedicated server.
When it comes to web hosting, it’s best to start small, ideally using a shared hosting provider. You can usually get up and running for as little as $10 per month.
HostGator and SiteGround both offer inexpensive shared website hosting that you can later upgrade if you need to. Some website builders provide bundled hosting services as well.
If you require all of your employees to be in the office each day, you may be robbing yourself of a cheaper (and just as efficient) workforce. Office provider IWG reports that 70 percent of people around the world work remotely at least once a week.
With productivity tools like project management software, messaging platforms, and video chat services, distributed teams are as efficient as ever. Between Slack, Microsoft Teams, Google Drive and Hangouts, Zoom Video, and Dropbox, your communication choices are nearly endless.
Project management software facilitates virtual teams and makes your business more efficient overall. Platforms like Trello and Asana allow you to set goals, delegate tasks, create deadlines, and track the progress of different action items transparently, keeping your entire team on the same page. Doing so cuts down meetings times and the necessity for other events to bring your team up to speed.
Unless the size of your team is creeping towards the triple-digits, nearly all of these software products are free.
“Time is money” may be an old adage, but there’s a reason that it’s stuck around for as long as it has. Any time that you or your employees waste on menial, repetitive tasks chips away at other opportunities to make more money.
Take stock of all your business processes, and find areas that you can automate. Implement time clock and mileage tracking software that hooks into your payroll process to avoiding manually calculating those figures each pay period.
If you rely on social media and email marketing, utilize online tools like MailChimp and Buffer to create campaigns ahead of time, and schedule them to go out automatically after specific customer touch points. Both platforms offer a free tier to get you started.
It may even be worthwhile to hire an external consultant to analyze your processes and offer automation suggestions. An outside pair of eyes usually spots the inefficiencies that people who are too close to the business (i.e., you) may miss.
It’s easy to waste a ton of time and resources on customer support. Do everything in your power to make sure that your customers have the material and knowledge base to succeed. The more confident your customers are in using your product or service, the less they’ll contact you for help, which in turn, saves you money.
To help your customers, set up a Frequently Asked Questions (FAQ) page that’s continuously updated as new questions arise. Why answer the same question numerous times when you can document the answer instead?
Other tools that help support customers include live chat and help desk software. Live chat capabilities enable your support staff to assist several customers simultaneously and are generally more efficient than email and phone support.
Help desk software combines live chat, FAQs, knowledge base documents, customer forums, and numerous other tools into one package. You may find the customer forum especially helpful as customers will answer other customers’ questions, lightening the load on your support staff.
Zendesk and Zoho Desk both offer a suite of help desk tools for small businesses.
The Internet is a treasure trove of free software for small businesses. With a little hunting, you can find free versions of most of the software we’ve listed in this article. While you’ll eventually need to upgrade to paid versions, the free alternatives are incredibly beneficial when you’re first starting your business.
Depending on the size of your small business, you may never need to upgrade to a paid product.
Open-source software is another option that you should research. Although these products typically don’t come with customer support, they’re always free to use.
You should never stop working to reduce your small business expenses. The landscape is constantly evolving, and unique opportunities will continue to pop up.
Outside of your own research, talk with other small business owners to see what’s working for them. You may find invaluable cost-saving strategies that you would have never imagined.