When you’re a small business owner, it can be hard. You know that it’s a competitive landscape out there, which is why so many small businesses end up failing. You know that 9 out of 10 startups fail, and that almost half of all small businesses don’t make it to their 6th year.
Knowing that, you’re probably looking for the best way to increase your customer base, and thereby your profits. But there’s another way to increase your business profits and cash flow, and that’s by cutting costs.
Because Profit = Revenue – Costs, you can find ways to increase your revenue or lower your costs. Surprisingly, this option is less looked at when small businesses try to increase their profits. However, it is often much easier, and something you can start doing today.
So, today we’ll look at the 5 best ways small business owners can save money—starting today.
#1 Don’t do permanent hires—use cloudsourcing
The first cost-cutting method comes our way thanks to the new gig economy. Instead of having to do the entire and expensive process (costing as much as $5000, without salary or benefits) of finding and hiring a new employee, you can just outsource it.
Here, if you need someone to write content for your blog, you don’t need to hire someone. You can simply go to such sites as Freelancer or Upwork. You can find someone for nearly every single job you need to have done, from web design to content creation to social media management. In this way, you don’t have to go through the long process of firing someone either. If you don’t like their work, you get your money and just move on to the next person.
#2 Barter, trade, and pool your resources
Another great way to that small business owners can save money is by going back to the old, old system: trading and bartering. Instead of having to pay for services that you want, such as web development, invoicing, design, and marketing, why not trade it for your own services? If you do printing, propose free pamphlets and print materials in exchange for web support.
Another option is to gather your resources. If you and another business with similar needs can come together and purchase an item that will be beneficial to you both, and which you can share, why not put your heads and money together and purchase it?
#3 Move to a coworking space
One amazing way to cut serious costs is to get along with the new system of coworking spaces. These spaces allow entrepreneurs and small businesses the opportunity to rent office (or simply desk) space on a monthly, quarterly or yearly basis. It doesn’t require long leasing agreements, credit checks and the like, and the prices are much, much lower.
If you find you can’t afford the dedicated room, you can hire a desk. Alternatively, if you need more space, it will be easy to upgrade.
#4 Use free and open source software
Why waste money on expensive software or SaaS subscriptions? For the most part, your business does not require you to purchase the Microsoft Office Suite.
For regular document processing, you can use OpenOffice or simply Google Docs and Google Sheets. For light design-related work, you can get by with Inkscape (instead of Illustrator) and GIMP or Pixlr instead of Photoshop
However, you should only be using free software if it is the software that your business does not depend on. A designer doesn’t need Microsoft Excel and can settle for Google Sheets. However, it wouldn’t be wise to use GIMP if you are a photographer or designer.
#5 Track and cut down on expenses
Instead of just looking at external things you can do to save money on, look a little bit on the inside too.
Here, I’m talking about cutting down your expenses in general. For example, if you’ve made it a tradition to get everyone lattes and breakfast bagel sandwiches every morning, you might want to consider parsing that down. Purchase a brew coffee machine and move the sandwiches to once a week.
However, the best advice is for you to track your business expenses. Once you do, and you are strict with it, you’ll be able to understand where your money is going, what the best and worst purchases are, and have a great view on the parts of your business you can cut back on.
If you follow these 5 simple steps, you will be well on your to saving money for your business.