5 Ways to Cut Costs as a Small Business
From more money in your pocket to business security and being able to serve your customers better - there are countless reasons why small businesses are always looking to make more profit. There are two ways you can do this:
Smart businesses will find ways to do both of these. However, it is arguably smarter to reduce costs before looking to sell more. This is because if you can lower the cost of delivering a product or service when it comes to selling more you make more profit each time you sell it. Equally, cost-cutting is usually cheaper and more sustainable than often momentary boosts in sales.
In this guide, we give you 5 ways that your small business can cut costs.
1. Assess Your Software Needs
Software can be expensive. This is especially true when your business needs specialist software in order to do your job. But do you ever question whether you REALLY need that pricey tool?
Assessing your software needs can often highlight much cheaper ways to do something. For example, instead of investing a huge sum in accounting software every month, would a much cheaper invoicing tool and simple spreadsheet do everything you need?
Too often software companies bundle in all sorts of functionality you don't need. Of course, this is great if you are a huge business and you are going to use every tool going. However, smaller businesses usually find themselves paying over the odds for functionality they are never actually going to use.
2. Business Premises
If one small benefit has come from the recent pandemic, it is that many businesses have realised they don't really need to pay for costly business premises. Before you renew your office/premises contract ask yourself whether you really need the space you are paying for.
Could your team work from home? Could you pay less for a shared office to facilitate hybrid home/office working?
Although not technically cutting costs, you could help reduce your premises rent by subletting to others who have found the need for occasional space (but check with your landlord that you can do this first).
In-house vs Outsource
The question of undertaking business functions in-house vs outsourcing to another business or freelancer is an age-old question. There isn't really a correct answer when it comes to helping you cut costs, as it will depend on your needs and unique circumstances.
For example, when it comes to writing content for your business bringing someone in-house may be more cost-effective if you can fill their time. However, if you have smaller content needs, outsourcing to a copywriting agency may help you get more for your money.
Although outsourcing can be more expensive 'per hour' you will typically receive a better, more professional service than you would get in-house for the same overall cost.
Another area you could cut costs is when buying equipment.
Often businesses will invest in unneeded kit because they believe it will help them speed up processes or serve their customers better - however, the first question to ask yourself is whether you really need new equipment or whether you could fulfil that need in some other way.
If you find that buying new equipment really is neccessey then consider your options. For example, could you fulfill your needs with a used piece of equipment? The goal is to achieve the same result whilst spending as little as possible on new kit.
Cut General Costs
Bills and general costs can be a silent profit killer for small businesses - especially when they are set up for automatic payment. Regularily checking you still need certain services and whether you can get those services cheaper is a good way to ensure you arent paying more than you need. The exact costs you pay will depend on your business niche, but some common ones which are worth checking include:
Outsourcing (such as booking keeping)
Stationary and office equipment
Tea & coffee
Many costs such as bills will rise over time with little notice. Setting a reminder to check these at least once a year will ensure that you are always getting the most for your money.
Cutting Costs for Small Business
Finding smart ways to cut costs can save your business thousands of pounds over the years. Taking the time to find where your money is going will help you identify where you might be able to save.