With an economy that’s struggling, every small business owner is looking for ways to increase profit. Saving money in small areas and improve efficiency is the critical practice that can make any small business profitable and survive the tough economy.
The good news is there are plenty of areas you can find to cut cost. Rather than select the obvious areas, I wanted to highlight a few options you may want to consider. The following are ten cost-saving ideas for your small business:
- Outsource your accounting services– Does every business need a full accounting department? Often, business owners feel the need for a full-time bookkeeper, accountant, controller, CFO, etc. to help them with their business. In most cases, a full-time accounting department is not necessary. Small businesses are in need of an accounting staff at every level, but not necessary fulltime staff at every level. Hiring a fulltime Controller to do data entry is very expensive and not very efficient. TGG Accounting can meet that need for small businesses.
- Go paperless– Lower your storage costs and printing costs and improve overall efficiency by running a paperless office. By scanning documents, you can send and share information effortlessly, saving your business time and money. One example of this would be using DropBox.com.
- Use a 0% credit card balance transfer– Transferring the debt balance from one card to a 0% intro APR card is a great way to save money on interest charges and pay down your debt. For example, if you had a $10k balance on a card with a 17% APR and transferred the balance to a credit card with 0% intro APR for 12 months, you would save $1,700 in interest alone!
- Lease equipment– To avoid the big upfront costs when purchasing equipment, consider a lease. You not only conserve cash but can save a substantial amount in repairs, upgrades and maintenance, since many lease agreements cover these expenses.
- Collect cash in advance– When extending credit to customers, consider collecting a percentage of cash up front with every purchase. This will help reduce risk, improve cash flow and save money in collection efforts. For example, you can require a 25% down payment on all future purchases made from your net 30 account holders.
- Ask for the discount– The suppliers you work with may have quantity discounts of 50% or more depending on the terms. You may be able to meet these requirements and qualify for a lower price. To find out, ask about discounts and what you need to do to earn them. Vendor credit or discounts can be as valuable as an interest free loan. And again, it never hurts to just ask!
- For retail businesses, switch your credit card processing company– If the business does a significant volume of card processing (Visa, Master Card, AMEX, etc.), any savings will have a big impact on the business. Let’s say you process 6,000 transactions per month and the savings will be 5 cents per transaction, this will be a $300 in saving every month or $3,600 a year.
- Consider bundled services– Almost every company offers bundled services that include phone service, cable, internet, fax, and web hosting. Bundling two or more services from the same company can save your business hundreds of dollars per year.
- Manage employee spending– Abuse of employee’s company credit card occurs in many companies at every level. The employers can use basic monitoring tricks that will prevent any fraud and identify any misconduct with the credit cards. A few examples are setting guidelines, activating pre-set limits, alerts, and reconciling monthly charges against expense reports that are being filled out by the employees.
- Offer electronic invoices– Electronic invoicing (e-invoicing) is the issuing of invoices by e-mail directly to your customer. You can reduce your company’s printing and postage costs if you begin sending invoices electronically. You will also ensure that the customer will receive the invoice and do not risk losing it in the mail which could cause a delay in payment.
Saving money and cutting cost is vital to a company’s survival in a down economy. TGG Accounting specializes in reducing costs for businesses. We hope these few tips help you navigate these tough economic conditions.Written by: Adriat Markos TGG Accounting