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Thanks to S&S reader, David, for this post on ways to save money in your business!
Effective Ways to Save Money in Your Business
Whichever way you cut it, starting and running a business costs a lot of money. And with much of the world currently in quarantine, you may find it hard to earn revenue to support your venture.
According to Failory’s 2020 startup failure rate report, one of the most common reasons startups fail is because of budgeting and pricing issues.
So how do you budget without significantly sacrificing the quality of your goods and services?
1. Start With Your Space
The allure of a posh office in a swanky business district may be hard to resist for startups. This is especially for new companies that need a specific look to entice a specific set of investors. Then there are new businesses that place a high premium on accessibility where office location is concerned. Both types of commercial real estate come with a heft price tag.
Find a good broker who can negotiate the lease on a property of your choice. Professional brokers may find leverage to get better terms on your lease. Better terms, as opposed to just a lower rental price, could help you manage your overhead costs better.
If you have a small team, you should also consider moving to a co-working space. They’re cheaper than traditional offices but are more crowded as you have to share your space with other companies. If it’s still too much for your budget, ask your team to work from home. Rent meeting rooms in co-working spaces only when you need them.
2. Consider Outsourcing
A business process outsourcing service company already has experts, office space, and equipment to fulfill tasks like customer support, marketing, data analysis and cleansing, and more. So you don’t need to worry about expenses related to onboarding, tools, benefits, and payroll. Plus, outsourcing professionals often hire workers from countries with low labor costs, allowing your business to get the same quality of work without the steep price.
3. Keep Better Track of Your Bills
Penalties from late payments can stack up and cause you to spend significantly more than you originally planned. Keep a virtual calendar with alarms to ensure you’re reminded of your due dates. If possible, ask your providers for a more affordable plan.
Although you may have to compromise some features of the services you use, it’s a necessary sacrifice to keep your business afloat.
4. Buy Used or Refurbished Equipment
Brand new office equipment like computers and network hardware is expensive. The average price of an office PC costs about $632. Used and refurbished equipment work just as well for a significantly lower price of $100 to $130.
Here’s the difference between the two.
- Refurbished – This is used equipment that’s been reviewed and reconditioned by the provider before selling it. It often comes with a limited warranty, too.
- Used – Used equipment doesn’t get inspected or repaired. There’s no guarantee that it’s issue-free.
Businesses fail mostly because of improper budgeting. Without a financial plan to guide you, you may not be able to make the right decisions for your business. Whether you need to boost revenue or expand your market, the right budget will contribute to stability if not profitability. And part of budgeting has to be knowing where to cut costs.
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