Statistics show that 82 percent of businesses fail because of poor cash flow management. So how you handle your business finances, will largely determine the success and the survival of your SMB. One of the ways of keeping your cash-flow healthy is by reducing your operating costs.
Still, when deciding on cutting your expenses, you need to make smart choices. After all, you don’t want your decision to negatively affect your company’s bottom line.
Here are a few suggestions for you to consider.
Embrace technology
The rise of technology allows us to advance our businesses and save money at the same time, as we can now streamline and automate many small business functions. With the right kind of input, technology promotes efficiency, while some automation services work faster than humans, and with fewer errors.
There are many SMB areas where technology can be used to save your time and your money. You should consider the tasks that are the most time consuming, either for you or your staff, and look for the ways technology can help you.
When you’ve identified those areas, such as accounting, payroll, marketing or customer service, look for the most adequate technology solutions and start implementing them.
Outsource
Even though it may seem that outsourcing your tasks to a third-party professional will only increase your expenses, nothing can be further from the truth. Being engaged with the tasks you’re not an expert in can result in wasting your precious time resources. It can also prevent many negative consequences from occurring, saving you a lot of cash too.
Financial matters, for example, when not handled right, can put your business at great risk. With the help of an accountant or a financial advisor, most of these common pitfalls can be avoided.
Another area you should consider delegating to professionals is marketing and advertising. Although marketing significantly influences the return of investment, most of the small business owners can’t dedicate the time and expertise needed to experience sizable results. Investment in this area not only saves your money but promotes your growth too.
Reevaluate your suppliers
Sometimes, an inquiry into your suppliers can lead to significant cost reduction. You should start shopping around and see if you can get better rates for your SMB.
Make sure you analyze your suppliers and determine if their terms are competitive. Try to negotiate with the most important ones and check if you can get better terms. If you’re not satisfied, you can look for another vendor that will offer you more acceptable payment terms.
Furthermore, some of them may offer you a discount if you pay your invoices early. No matter how small the discount may seem to you, the sums add up. When calculated annually, a 2% discount on your $100,000 operational costs can save you $2,000, which is the amount that can come handy for covering some other expenses.
Use credit cards wisely
A study shows that 67% of SMB owners have credit cards, and 31% of them use it to meet the capital needs of their companies. While this way of financing your business has its downsides, owning a credit card can be quite beneficial when facing a cash-flow challenge.
Some of the credit cards can actually save you money, as they provide you with great discounts and rewards. Make sure to do the online credit card comparison often and choose the credit card that fits your SMB needs the best.
Engage your employees
Even though it may seem far fetched at first glance, investing your money into your employees can actually save you significant amounts of money. Your SMB should aim for boosting employee engagement, as the workers who are more involved with your business and its goals are less likely to leave and bring your company significant losses.
Furthermore, since they are fueled by passion and purpose, engaged employees also more efficient and productive. Some estimations show that disengaged employees cost your company 34% of their annual salary. You can calculate the rest easily.
Go paperless
Just by going paperless at your workplace, you can save your company significant expenses for paper, ink, postage and other mailing supplies. All these recurring expenses add up to a large sum that you can definitely find a better use for.
Consider not printing anything unless it’s really necessary, and transferring to digital payment and invoicing systems. This will not only save you money but also improve your common business procedures, as you can automate some of the tasks and make them faster.
Leverage online marketing
If you haven’t already tried the wonders of digital marketing, it’s high time for going online. This way of marketing can only benefit your company, as its low-cost and fast-paced, while delivering top results. When approached professionally, it’s a great way of reaching out to potential new customers and establishing meaningful relationships with the current ones. Start with your website and your business blog, and engage your business on social media channels too.
When looking for ways to reduce the operating costs of your SMB, make sure you’ve considered alternatives to your everyday business practices. Sometimes, all you need to do is to change them a little and enjoy the great benefits.
