13 Tips To Save Money When Running A Small Business

Running a business is a challenge. Running a small business with less money is an even bigger one. Saving money as a small-scale entrepreneur may be difficult, but it’s certainly possible. With a few cost-cutting tips to rely on, you can improve your bottom line and save a great deal of money.

Here are some ideas to reduce expenses and better your cash flow.

1. Digital over Traditional Advertising

In today’s intensively competitive world, staying visible is essential for businesses to survive. As such, advertising is a critical function for small businesses. But traditional advertising isn’t the only available medium today. The online medium is much more accessible and affordable.

You can set up business accounts for free on social media platforms. If you’re a supplier of goods, check out Amazon or Flipkart. These e-commerce sellers usually handle the marketing of products themselves, so you end up spending less on advertising. Invest in Search Engine Optimisation (SEO) to bring organic traffic to your website.

Join a Facebook group and leave valuable comments on posts with high engagement. Or probably start an online store on Instagram and push ads with minimal budgets to increase reach. Going digital with advertising is one of the best ways of cost-cutting in business.

2. When you have to Advertise Offline, go Old-School

If you’re not digitally savvy, there are other ways to advertise offline, instead of putting ads in a newspaper, print flyers. Add a personalised thank you note when sending out orders to make customers feel special. Or treat them to coupons.

Word of mouth works wonders, too. Spread the word among your friends and family. Let them know what you’re working on and how they can help. Ask them to let others know about your business. Promote customer testimonials to support your claims.

3. Enter into Partnership or Barter Deals

Small businesses don’t always need to compete with one another. Partnerships with complementary businesses can create powerful synergies and help cut costs. For instance, if you’re hiring printing services and want to save up money, offer to promote the printing business. Let them place their logo on your material.

Another example will be if you’re into career coaching, working with a social media manager. Ask the manager if they’d like to host live interviews on your platform. Or if they’d like to take a coaching session on social media for your audience. Opting for barter or partnership deals is one of the modern ways to cut costs in the business.

4. Take Care of Loyal Customers

Every small business owner will agree that happy customers are loyal customers. And loyal customers bring in repeat sales. Loyal customers also bring more customers and, therefore, more cash inflow. They will spread the word about your business with their peers. But don’t let their efforts go unrewarded.

Provide referral discounts to customers who will promote your business for you. It makes them feel as if they’re a part of your startup. A simple gesture like wishing your customers on special days goes a long way in being remembered.

5. Indulge in Bulk Purchases

Often, suppliers offer discounts when you purchase items in bulk. Be it something as small as pens and stationery or big as raw materials for your products. Leverage bulk discounts to cut down manufacturing and shipping costs. Look at the costs you’ve borne so far in this department.

Talk to your vendors and negotiate for a discount. If they’re unwilling to give you one, head to online sites like IndiaMART that list suppliers for all business needs. Shortlist the best ones for you and negotiate for discounts with them. Purchasing in bulk is one of the low-key cost-saving ideas.

6. Hire Smart

Running a small business does need a few specialists who come with years of experience. However, refrain from going all out and hiring only experienced employees. Today’s employment market will give you plenty of options to choose from.

You can select inexperienced but intelligent employees who have the potential for the job and willingness to learn. You could also choose to hire interns instead. If you know that there will be a higher demand for your product or service during certain months of the year, hire interns for the job.

Generally, full-time employees need to be given a higher salary and more allowances all year round. You can save up on money in some months and invest it for other purposes. Hiring wisely should be one of your most preferred cost-saving measures.

7. Outsource

If interns aren’t the solution for you, outsource jobs on a contractual basis. Outsourcing jobs to freelancers will still help you save on employee costs to a large extent. You don’t have to pay additional salaries, overheads, or provide equipment to freelancers. Hire employees on a contract basis and direct savings to other core functions of your business.

8. Revisit Expensive Employee Perks

If you need a certain number of employees, look at other ways to reduce costs in a business without adversely affecting employees. Providing a canteen service is expensive. If your premises have a common canteen, let your employees use that.

If you provide a complimentary breakfast or lunch, cut down from four or five dishes to two or three. In place of these perks, hold special games or gatherings for employees once or twice a month. Sometimes, intangible perks work equally well as tangible ones.

9. Be Energy Efficient

If you’re running your business from commercial premises, utilities may account for a significant chunk of overheads. Look for ways to reduce energy consumption. Install a cooling system that is proven to cut costs and save electricity. Encourage employees to switch off fans or lights when not in use.

Avoid using paper unless required to print important documents. Going down the green route will not just save costs but also build goodwill for your business. It makes for one of the best cost-cutting tips for business today.

10. Cut Maintenance Costs

Go ahead and cancel that daily cleaning service you have subscribed for. Opt for a weekly service instead and encourage employees to empty their trash or reduce wastage. Review other maintenance costs such as these.

Search for items that don’t need regular maintenance, and reduce the frequency. To cut down on costs, you have to dig deep and find the minuscule amounts you can save regularly.

11. Prefer Second Hand Equipment

When venturing into a small business for the first time, it’s advisable to use second-hand equipment instead of new ones. If you’re into manufacturing, test out production on a piece of used machinery to save cost and avoid risks. New equipment is generally expensive. Also, inexperience may lead to negligent handling, which will only increase costs for repair and maintenance.

If you’re providing services, you could give out second-hand laptops or personal computers in the initial phase of your business. In this way, you won’t just be slashing costs. You’ll also be reducing e-waste. Buying used equipment is one of the many valuable ways of cutting business expenses to a great extent.

12. Take advantage of Free Apps and Software

The growth of small businesses has encouraged app and software developers to come up with ingenious solutions to business problems. Providing free apps and software is one of them.

Before spending that big check on purchasing expensive software, check for free alternatives. You will find open-source software or free mobile applications for almost all of your business needs – photo and video editing, invoice management, project management, and more.

13. Be Smart with Finance Management

Finance management is, perhaps, the most crucial function of a small business. A lot of your cash may go into paying salaries or allowances. Such expenses may go unaccounted for, increasing your profit margins. Higher profit margins mean higher taxes.

Keeping track of all expenses may be challenging. But don’t let the dread of bookkeeping get to you. Use available mobile applications, such as OkCredit. These applications are free and will help you manage finances, saving up tons of precious time and money.

Conclusion

Small businesses must stay on top of their financial needs at all times. Allocate timely evaluations for your budget. Use the above cost-saving measures to tweak expenses to save as much as you can. You reduce the risk of running out of money by staying on top of your budget.

Also Read:

1) 10 ways to grow and market your business with no money
2) Easy ways to maintain your wealth if you are a business owner
3) Technologies Every Small Business Should Use to Grow Faster
4) Types of the franchise for best business opportunities

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FAQs

Q. What is the cost of running a small business?

Ans. The cost of running a particular type of business depends on multiple factors. Procurement, distribution, delivery, marketing, recruitment, legal, taxation are different costs that you may have to bear depending on your business. Overheads, utilities, permits are additional hidden costs that turn up from time to time. Ultimately, the cost of running a small business depends on the industry it operates in and the owner’s management processes.

Q. Why is finance management a crucial function for small businesses?

Ans. Managing your finances is an essential and unavoidable function when running a business. If you’re not on top of your finances, you’ll end up losing more money than you make. It will, in turn, affect your business’ stability and longevity. If you want to run a small business successfully, it’s advisable not to lose sight of finance management.

Q. How can free software or applications help? Where can I find these?

Ans. Free software and applications help you save a considerable amount of money. You can use them for most of your business functions except if certain core functions need specific software. You can find various free applications online. For instance, you can use Canva for designing creatives, Slack for communication, Google suite instead of Microsoft Office, OkCredit for finance management, and OkStaff for employee management.

Q. Should I hire freelancers or interns for all business functions?

Ans. Freelancers and interns are available for all sorts of jobs. However, it is up to you to decide where you need an extra pair of hands for lower costs. For instance, if you’re producing packaging material, you can’t employ an intern to manufacture products. Instead, you can have them help with administrative tasks.

Q. What are my responsibilities as a small business owner?

Ans. Your responsibilities can vary from being a door-to-door salesman to managing finance and accounting. Sometimes, you can’t delegate specific tasks that need your attention. You may be the face of the company for customers. Therefore, a task like selling that you could otherwise give to someone else may fall upon you.