Starting a Business? How to Minimize Costs Across the Board
Wednesday, October 23, 2013, 1:00 AM | Leave Comment
Small business is big. According to the U.S. Small Business Administration, the more than 23 million American small businesses account for more than half of all sales made in the United States.
However, many small businesses struggle to keep costs down and improve profitability.
Here are just a few ways you can cut costs and save without having to make painful cuts later.
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Telecommute
Allowing some or all of your employees to telecommute can save money on several fronts. You can cut down the cost of office space, reduce worker attrition, and give back some control to your employees.
Additionally, a Global Workplace Analytics poll of 1,500 technology professionals revealed 10 percent would take a pay cut to work from home, and 36 percent would choose telecommuting over a pay raise. Telecommuting isn’t just good for the wallet, it’s good for morale.
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Write Everything Off
Auto expenses can be a big deduction on your businesses taxes. Books, legal fees and the various costs of outsourced lawyers and tax professionals can all be written off.
Half of what you spend on dining, catering and entertainment for your company can be written off. Those traveling for business can write off the cost of airfare, cabs, hotel costs, and even tips, legal site Nolo.com says.
With a business credit card, it’s easy to track related expenses for when tax season arrives.
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Take Advantage of Early Pay Invoices
Many supplies offer discounts for customers who choose to pay the balance of their invoices off early, sometimes offering up to two percent off when the bill is paid in 10 days or less.
While this might seem like a small savings, it can really add up when you are ordering paper, office supplies, goods, services, and more year-round. A two percent reduction in overall cost of operations is nothing to ignore.
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Slash Energy Use
Energy costs can be a slow poison to your business. To combat them, cut your air conditioning bills by improving insulation and windows. Consider replacing all the bulbs in your office with energy-efficient models that can save you money.
Lighting manufacturer Precision-Paragon reports LED bulbs cost about $45 and last for 25,000 hours, whereas CFLs cost less than $1 but last for only 8,000. That’s a lot of lumens.
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Secondhand Office Supplies
As tempting as it is to buy that $1,200 chair for your office, chances are good you can find something just as good at a mere fraction of the price at secondhand, consignment or last-chance office supply stores.
It might not be the latest model, or it might be a little broken-in, but when you add up the costs of office equipment, furniture and other necessary accoutrements of a single room, it can be a staggering total. Does anybody need to know the coffee maker is secondhand?
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Check your Inventory
Beware a lazy inventory manager. A business should only keep supplies in stock that are needed, and rarely order based on a “what if” scenario. This will not only reduce overhead, but give your stockroom more time to deal with issues such as shipping and receiving.
If your inventory manager is in the habit of ordering things that sit on the shelf and never move, it’s time to change the methodology in the warehouse.
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Stephen Brown is a small business owner and blogger from the Midwest.
