3 Simple Ways to Cut Business Expenses
From employee salaries to office space, things add up quickly when you run a business. Each company has its own set of expenses, and while you can’t eliminate all your costs, you can make some changes to reduce them.
Business owners have their own suggestions on how they reduce business expenses. Here are some cost-cutting solutions your peers have tried that might work for your business.
1. Look at your insurance.
When business owners are trying to cut expenses, it’s important to evaluate where money is going and if they can renegotiate contracts including insurance.
“Insurance coverage and rates tend to change from year to year dependent upon industry trends and market performance,” said Joe Jonas, director of wholesale and consulting at Insureon. “It’s a best practice for small business owners to re-evaluate their insurance program on an annual basis to ensure they are getting the most comprehensive protection at fair market value.”
Business owners who allow their insurance to automatically renew without consulting an insurance professional may be paying more than they need to. In addition to reviewing insurance prices, business owners should consider bundling coverage.
“Similar to purchasing your auto and homeowner’s insurance, many insurance carriers offer price breaks when small business owners purchase multiple policies at the same time,” Jonas added.
One of the most common bundles, according to Jonas, is a business owner’s policy, which bundles general liability coverage and commercial property insurance.
2. Evaluate your contracts and look for free resources.
“Periodically, let your vendors know you are price shopping – a lot of companies have loyalty rewards or have the ability to cut you a deal if you continue to work with them,” said Haley Palmer, owner for WIN Home Inspection Central Oregon.
In addition to reviewing existing contracts, Palmer recommends finding free resources such as social media and business networking website that cost nothing to set up an online profile.
Spencer Shaw, owner of Re-Bath Spokane Valley, suggests evaluating the office space you occupy. “If the market is soft and there isn’t high demand for what you occupy, start negotiating a lower rent,” he added.
3. Review your staff’s responsibilities.
Payroll is one of your significant expenses. If your staffers are in the wrong positions or aren’t doing their share, you’re losing money.
“Before you jump to hire, make sure you are thoroughly reviewing the day-to-day workload of your staff,” said Shaw. “Make sure the right people are in the right seat pulling their weight. Sometimes changes are required that can prolong the necessity to hire the next person too early.”
“Forecasting sales ensures you have enough staff but also that you are not overstaffed and thus increasing your labor,” said Andrew Diamond, president of Angry Crab Shack.
It’s also important to stay up-to-date on best practices so you can prepare for possible wage increases. “Stay current on any new laws or wage increases in the coming future so you have a plan on how to deal with the increase in your payroll,” Diamond added.
If you’re still looking for ways to cut costs, considering hiring an accountant. “There is almost always an area of your business where you can save money or reallocate it to spend it more wisely,” Palmer said. “It might even be beneficial to hire an accountant or CPA to help you look at the books to figure out ways to shrink your spending.