If you’re trying to tighten your belt, but can’t find the right notch for a snug fit, here are 25 money-saving strategies for your small business to help you reach the next stage of growth.
Saving money, particularly as a small business, can be challenging. And, if you’re a bootstrapped start-up, money could be tight already. You probably don’t have a large portion of income that you can keep safe as savings, and you’re in the position where opportunities to make your operations more cost-effective are attractive.
So, amidst the many (many) money savings tips out there, you need a few strategies to trim overheads, increase efficiencies, and still reach your target market until your small business is in a better financial position.
Here is a comprehensive resource on 25 money-saving strategies for your small business:
25. Shift to low-cost alternative advertising
This is a well-known, popular, strategy for smaller businesses. Thanks to the many low-cost alternatives in Internet marketing and advertising, it’s possible to cut your traditional advertising costs and still get your message to your target market. How?
“Public relations is a much cheaper and more effective form of advertising,” says Marissa Haynes of Wealth Management Group, a 15-year-old business. Haynes and her colleagues frequently use their expertise to write articles, which gives them the reputation as thought leaders in their industry and makes them credible sources of information for publications and media outlets.
Related: How to manage your cash flow when your company is growing
24. Find sponsors for your events
Events can be a profitable PR tactic too, because it draws in both your repeat and new customers. There are many small businesses that rely on regular events, whether its gala dinners or seminars to expand their customer base. Haynes recommends getting sponsors who will carry the expenses of these events in exchange for advertising their brand at the gathering.
This strategy is typically beneficial for both the host-business and the sponsor-business; if the two companies are in related areas and there’s the possibility for overlapping target markets.
23. Outsource your non-core functions
Your employees are essential to your business, but they also cost cash, and between salaries, office space and insurance, your team could be consuming the largest chunk of your small business’ budget.
“Choose to keep your full-time staff to a minimum and outsource work to independent contractors for the work that your team can’t cover as needed,” says Georgette Pascale, owner of PR Firm Pascale Communications.
“Use the same method by hiring consultants when needed,” explains Deborah Sweeney, CEO of My Corporation Business Services. Sweeney adds that not only can she negotiate a lower rate with consultants, but her business benefits from their varied experiences in their fields of expertise.
22. Successfully negotiate with vendors
The initial price you and your vendor settled on doesn’t have to be the only and final price. “We were able to negotiate better prices on everything from office supplies to the phone bill,” reveals Ian Aronovich, GovernmentAuctions.org. Keep in mind that your vendor also wants to stay in business, which means they’re likely willing to negotiate lower prices rather than lose a regular customer.
You won’t lose anything by trying to renegotiate a price; you might even find yourself reducing your price by a few hundred rands off your monthly operating costs.
21. Have you tried bartering?
Bartering can definitely be an effective option when your cash flow is tight. Chris Hoyt of Langua Travel has used this method to great effect with his business – using trade deals for B2B compensation. If you need goods or services and have something of value to offer in return, this could be the winning strategy to go with for now.
Pascale adds that she uses bartering successfully by offering her own PR services in exchange for work by an interior design for when she needed an office redesign. As with renegotiating your vendor prices, the worst answer you can get is no, and you might be surprised at how quickly you’ll hear a yes.
20. Base your operations from the Cloud
Every business, big or small, needs some kind of software, for functions like bookkeeping, word processing, and presentation. “You do not need to buy that expensive office software and servers when you can switch to a Cloud vendor, such as Google, at a fraction of the cost,” says Ali Asadi of A Profit Maker. For business-related activities you need to cover, you’ll find an open source and/or Cloud version of it thanks to the ubiquity of the Internet.
“We avoid the cost of expensive hardware and use Cloud-based services to host data,” says John Boyd, CEO of Cloud-based Meeting Wave. Bibby Gignilliat, founder of San Francisco-based Parties That Cook also use cloud-based software, "such as Salesforce, PayCycle and Staffmate where we pay per annual user, rather than needing to purchase and maintain expensive software in-house."
Related: Get started in the cloud
19. Cut down on unnecessary expenses
You can create a leaner company without losing staff or finding your cash flow challenging. “We used to provide free lunches to in-house staff, until 2009, that is, when the economy forced them to rethink their expenditures,” says Aronovich. Although you and your employees won’t want to give up these perks, it makes more financial sense to reduce or eliminate perks instead of retrenching employees. But, rather discuss these moves with them than make a blanket decision to cut costs.
Business coach Jennifer Martin suggests that you should compare vendors and get quotes at least once a year to make sure everything you’re paying for is at a fair market rate too, including your merchant card services. Taking the time to go through all your expenses and see where you might be paying more than you need to can save your business over the long haul.
18. Consider telecommuting
Telecommuting isn’t possible for every type of business, or even for every employee within your business, but when you can implement it, it can be a large money-saver. PR Firm Pascale Communications was founded as an ‘all-virtual’ agency from its very beginning six years ago.
“Keeping things virtual allows us to avoid the expense of office space and the ongoing operating costs that come with it, to focus on producing work at minimum overhead,” says Pascale. If you can’t convert all your employees to telecommuting, find a way to convert at least some of them, as this will save money in terms of the size of office space you’ll need to find (and pay rent for).
17. Go green to reduce energy
Going green is not only a great PR move that will impress your customer base, but it’s also a smart financial move. “Think of simple moves such as keeping equipment on a power strip and turning it off when not in use, or replacing your existing printer with one that prints on both sides of the paper, thus reducing paper waste and cost,” says Shel Horowitz author of Guerrilla Marketing Goes Green: Winning Strategies to Improve Your Profits and Your Planet.
Since a large percentage of environmental changes are put into place to save energy and make energy usage efficient. You’ll have to pay for the energy your business uses regardless; you might as well try to reduce your business’ energy, which will also reduce your costs.
16. Hire strategically
People with little work experience are looking for entry level positions and salaries to match, which will reduce your costs. “We use this approach and hired developers who are fresh out of graduate school, gaining a monetary advantage by providing an entry-level salary, and benefiting by having employees who are up-to-date on the latest technology, as well as often more nimble and eager to learn,” says Sweeney.
So, next time you put up a job ad, remove the line that says, “Must have X years of experience,” and replace it with “Recent graduates welcome to apply.”
15. Have a clear charity policy
Instead of cutting out all charitable contributions, you can spend 30 minutes compiling a policy that will clarify your procedures and limits. This will help you if your business is being overwhelmed by requests for donations. “I found this approach the best way to deal with the frequent requests I had to spend time answering,” says Tracy Kellner of Provenance Food.
Instead of using her own time to respond, Kellner created a specific ‘donations’ policy and made it available to her team who could hand it out (or send to) to anyone seeking donations.
14. Cut down on your employee working hours
This might sound counterproductive, but you could have employees who could transition to part-time or even four days a week given the opportunity. “My clients can cut many employees down to a four-day work week, which often works better for employees as well as business owners,” says Joellen Sommer, a financial expert.
This can be a challenging subject for employees to bring up themselves, but if you tell them you’re open to shorter work weeks for those who might want or need them, this can save you from paying those full-time wages without having to lose a good team member.
Related: 10 Employment Acts start-ups must know when hiring employees
13. Save with guerrilla marketing
You can use guerrilla marketing to both get your business noticed and save money. Nina Cunningham of Liberty Tax Service uses “Lady Liberty costume wavers” and on-the-street entertainment. They’ve been using these techniques since 1990’s and find that “for every two hours we have a waver, we get a customer,” says Cunningham.
“My number one marketing tip is ‘Don’t just think outside the box; Get rid of the box!’ Be creative. Think guerrilla. And if that doesn’t work, sometimes it just doesn’t hurt to ‘ask’,” says Lori Cheek of Cheek’d.
She adds that her business has been featured in the news because she phoned them and asked. “It’s sometimes that simple. I would say the most crucial thing in getting media coverage is a subtle yet persistent approach,” says Cheek.
12. Keep your meetings to a minimum
Your on-site meetings can be expensive when considering the travel and hosting costs and even virtual meetings can cost you in terms of billable hours or salary costs. If your team is sitting in a meeting, rather than producing work or getting new clients, you’re losing money.
Limit the amount of people who need to be in meetings. “By keeping client meetings to the lowest head-count possible, I ensure that my employees' time is well spent and that the associated costs are low,” says David Lanagan, founder of SMB Communications.
11. Reduce your shipping costs
If a main expense of yours is shipping and logistics, you’ll need a savvy shipping manager ensuring you’re always getting the best deal. “My shipping manager constantly checks and compares prices on shipping, negotiates better terms, and makes sure that he saves every penny he can. If we save a few pennies in shipping on each product, the savings falls to the bottom line and can add up to become big money,” says Jessie Connors, CEO of luxury e-tailer Peppermint Park.
Check and recheck the prices you could be paying to ensure you’re always getting the best deal.
10. “When in doubt, go without.”
This money saving strategy can be applied to every business. Ask yourself if you should really make that purchase? Do you truly need to replace something? “Think it through instead of just going for something larger or newer. Use what you have until you are certain you need something else,” says Chris Hoyt, chief innovation enthusiast & co-owner at CareerXroads.
This will prevent you from impulse-buying, as well as replacing working technology for something newer and shinier, which will keep unnecessary costs down. If it still works, don’t replace it. If you can do without it, don’t buy it.
9. Reduce your office maintenance
Does your office need a daily cleaning service? You can reduce the amount of office maintenance you offer to save on monthly expense. “Review ongoing maintenance costs and cut back wherever possible,” advises Sommer. Employees can empty their own dustbins, which means a cleaning service only needs to come once a week instead of daily.
If you reduce the frequency of your office maintenance costs, you can save money without reducing the upkeep or necessary service items completely. This will also teach staff to look after their own space instead of relying on someone else.
Related: How much does it cost to start a business?
8. Streamline your distribution processes
You may have to simplify or overhaul your small business’ distribution channels to eliminate unnecessary expenses. During the 2008-2009 financial crisis Shai Atanelov, CEO of BigTimeWireless, had to completely redo his business’ distribution system. He eliminated warehousing and shipping and turned to suppliers instead to “create a drop shipping partnership with them.”
“Our supplier would ship directly to our customers for us. They agreed to do this on the condition that we bring in enough orders,” says Atanelov. It’s possible to save when streamlining your distribution channels and working with your supply chain.
7. Reward your rain-makers
This may seem counterproductive, but spending to save does work in some cases. “Take the proactive approach of rewarding profitable behaviour from both your employees and your customers,” says Rhondalynn Korolak, managing director of Imagineering Unlimited.
There are many examples of how to reward your staff so they’re aware you appreciate them without having to break the bank. “It means making little gestures, like an occasional free lunch or treat, to boost employee morale and keep the work environment positive,” adds Connors.
If you’re spending a little on the people who do the best, or purchase the most products, you’re simply investing in a relationship that will ultimately bring more revenues (and profit) to your business.
6. Ensure your accounting department is running optimally
The easiest way to let expenses run away and overwhelm you is not paying on time, not invoicing your customers fast enough or by not following up on late customer payments. “When money is tight, things like late fees on bills or a client who doesn’t pay on time can be a challenge,” says Asadi. Ensure you have an efficient process in place to swiftly deal with these obstacles.
“Pay your dues on the due date, and take pains to ensure that your collections are on time and that the outstanding balances are minimised,” he advises. This will help you to reduce costs and keep your cash flow healthy.
5. Invest in technology (as needed)
Not to be confused with number 10, this is when technology will optimise your teams’ productivity and reduce the amount of time spent on menial tasks. “For my dentistry practice, adopting new technologies has allowed staff to automate previously time-consuming tasks, increase overall efficiency, and cut down on third-party costs,” says Dee Dee Meevasin of Dee for Dentist.
By upgrading your team’s technology, integrating tablets or automating admin systems to reduce time spent, your business can ultimately increase its profitability.
4. Ask for a discount
This may seem simple, but it’s effective. Ask your vendors and distributors if they have a promotional offer or rate and what it would entail to receive preferential pricing. “I’ve found that 90% of the time, asking for a discount and then preparing to walk away if it isn’t granted will actually be the trick to save you money and secure that discount,” says Nima Noori, of Toronto Vaporizer.
If you don’t ask, you’ll never know. It doesn’t always work, but when it does it can save your small business.
3. Go paperless
If you go paperless, it can reduce how much paper and ink you purchase every month. Not only can saving on materials save you money directly, but it can also save you on time and reduce your environmental impact. “The use of tablets eliminates the time our people spent on printing, scanning, and filing forms,” Meevasin explains.
Some businesses will be required to keep hard copies of documents for a specific period of time. If this is the case, look into having regularly-used forms printed and on-hand as opposed to photocopying them, to reduce expenses.
2. Negotiate the lease with your landlord
Renegotiate your rental agreement to save on the largest cost for small business, suggests Sommer. “We did just that and were able to save on one of the biggest expenses we faced,” says Bibby Gignilliat of Parties That Cook. If you need a prime retail space to make your business profitable, you should start asking about a better deal and cut down on this expense.
1. Regularly review every expense – even the littlest ones
Don’t leave looking at your expenses until your venture is in dire straits. Keep a constant eye on how much money your small company is spending on everything, as this will ensure you don’t waste precious resources on an unnecessary expense.
“In 2009, we analysed all company expenses to cut anything unnecessary,” explains Aronovich. Small reductions on constant expenses can add up to larger savings over the long-term.
Consider everything that isn’t providing you with a ROI, then cut back to the bare minimum, and eliminate anything extraneous.