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The first thing that comes to mind for the average person when they hear a business is cutting costs is that workers will be laid off. In reality, however, there are many ways that small businesses can continue expanding while still reducing their overhead. If you want to lower your expenses while continuing to grow, consider the following tips.
Consider new ways to raise capital
One significant expense for business owners is the interest on their debts. At some point, businesses will need to raise capital to expand by opening a new location, securing new inventory, or meeting new challenges. Rather than getting into more debt in these scenarios, Business.com suggests a new approach via crowdfunding, which is a public way of seeking financing from the people who support your business.
Work with new vendors
As a business owner, you should constantly evaluate your vendor relationships to ensure you receive a good deal. If you want to cut wasteful spending, try looking around for vendors who offer the same supplies for a discount. Some business owners stick with their vendors because they have rapport, despite paying more than needed. You can reduce costs with your current vendor by renegotiating your contract to see if they match a competitor’s pricing.
Use more streamlined marketing methods
Take the time to analyze the effectiveness of your marketing strategy. Is it driving new sales, or are you simply throwing money at advertising campaigns that fail to deliver? If so, you can save money by eliminating advertising methods that aren’t working for your business. Every time you invest in advertising, you should set clear expectations for your return on investment. If your advertisers are not delivering, consider different and less expensive types of campaigns or work with other advertising companies.
Join a trade association
Trade associations allow businesses to contribute to the local economy and reap the benefits of working together. Entrepreneur points out that although these organizations have dues, you often save more money than you contribute. They allow you to lower your insurance bills, receive cheap phone service, reduce travel costs, and enjoy discounts on recreational activities.
Schedule your payments for maximum efficiency
You might think paying your bills early is the responsible decision to get the task out of the way and prove that you are a reliable debtor. However, Entrepreneur suggests that you are leaving money on the table when you do this. Unless you receive discounts for early payment, you should hold onto your money in an account that receives interest instead and then pay your bills when they are due, no sooner. Alternatively, you can negotiate with your lenders to give you a slight discount if you pay early. In this scenario, you would benefit from paying your bills before they are due.
Use outsourcing effectively
There are many tasks that business owners can outsource instead of hiring new staff members for roles that are small in scope. There is a robust freelance market of graphic designers, writers, and advertisers for hire who you can pay for individual tasks as you need them. You can also outsource functions such as accounting, human resources, and more. Consider whether you would benefit from outsourcing a project or role before onboarding another employee for whom you must provide salary and benefits.
Save money on your credit cards and bank accounts
Business credit cards and bank accounts offer attractive rates and benefits for business owners. These perks may include cash back, airline miles, reduced interest rates, and rewards for maintaining a balance or meeting spending criteria. Smart business owners should regularly evaluate whether they have the best deals on their accounts and be willing to change things up if they can save money by moving their accounts to another company.
Get creative and learn from other businesses
The strategies above are only the tip of the iceberg when finding new ways to cut expenses. Collaborating with other businesses in your trade organization is a great way to learn what they are doing to reduce their overhead. You can implement some of their strategies if they fit your business well. Remember that you can continue to grow and expand while employing your entire team and providing them with benefits and incentives.
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BBB of Southern Piedmont and Western N.C. contributed this article.