How to cut business costs (almost) painlessly
In a recent CIBC poll , nearly three-quarters of Canadians said they thought Christmas spending was out of control. At the same time, more than half said they would still go over their budget this year. The takeaway: apparently, when it comes to Christmas shopping, many Canadians believe staying within budget is completely out of their hands.
But when it comes to business (and business owners) the good news is that sticking to your business budget and even cutting your costs – at any time of year – is within your control.
If you’re like many small businesses these days, you might wonder how else you can save money after what may have already been a belt tightening year. According to Troy Vosseler, co-founder of Gener8tor, a concierge Startup accelerator in Wisconsin, getting your employees involved can be a big help in saving the company money. Here are a few tips he shares on engaging your team in the budgeting process:
Be transparent. Share the business plan and the financial picture so employees know what’s coming in, what’s going out and how it all comes together. Show employees they have role in the business’s success and update them regularly on the company’s progress.
Be a role model. Employees take their cues from the top, so model responsible spending behaviour, whether it’s spending on travel or buying new software.
Ask for ideas. Lead brainstorming sessions with your staff on how everyone can cut costs. Not only will you potentially hear some innovative ideas, but you’ll be creating buy-in, a great way to incent your staff to cut back on the expenses they incur.
If you’re wondering what your business can do to save money in the upcoming year, consider some of these cost-savings ideas:
- Invest in programmable or smart thermostats to cut heating and cooling costs without freezing or frying your employees and customers. You can customize the temperature and save power for when it’s needed most.
- Go paperless. Or at least drastically cut your paper use by printing hard copies only when absolutely necessary – and then, always printing two-sided. Today’s digital world can greatly reduce your costs for paper, ink, mailing supplies and postage – seemingly small things that really add up.
- Make a deal with your vendor. If you buy office supplies or inventory on a regular basis, try to get a deal with your vendor. Be a good customer – pay your invoices on time to avoid any late charges, and see if paying early can get you a better rate.
- Pool resources with other businesses (even competitors) to save money on goods and supplies. Especially if you’re a very small business, this is a way to reap savings that can come from buying in bulk.
- But…buy in bulk only when it makes sense. Purchasing 50 pounds of coffee beans can save you money if your office goes through a lot of coffee. Buying a case of 50 binders may not be such a great deal if you’ve greatly reduced the amount of paper you use.
- Cut your advertising costs by using social media. More potential customers are online than ever before, so build an online presence by creating a website and/or a Facebook page. Use Twitter to tweet about and promote your business and create an email newsletter that you can send out to current customers…for free.
- Hire freelancers and contractors to take on one-off projects and non-core work or help carry the load during a particularly busy season. You’ll save money on health insurance, paid time off and other benefits you may be obligated to provide your full-time employees.
- Invest in keeping your current employees...because it’s expensive to hire new ones. A report by the Society for Human Resource Management (SHRM) estimates that every time a business replaces a salaried employee, it costs six to nine months' salary on average. That includes the costs for advertising, interviewing, screening, and hiring, as well as onboarding a new person, including training and management time.
Cutting costs may not be any business owner’s favourite activity, but it is one area in which you have some control. And chances are once you incorporate a few cost-savings measures in your office, you’ll be wondering why it took you this long to change your previous, less efficient ways.