Did you know that 8 out of 10 small businesses fail within their first 18 months? That has a lot to do with concentrating on increasing sales and forgetting about cutting costs. With a small business, costs are generally contained and not as high as they run in large organizations. However, those costs can be further reduced to a bare minimum by planning and making simple changes to your existing money-saving strategy. Here are five tips on how to reduce the costs associated with your small business.
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Invest in technology
Although technology might seem expensive, you can save tons of money in the long run by investing in smart technology. Teleconference services allow you to organize meetings around the globe from the comfort of your office without investing in expensive meeting venues, travel, food, and other related costs. Other new technologies include online payment services and remote desktop applications that can replace expensive tools and hardware, and cloud-based and/or open-source software that can automate processes such as invoicing and accounting ad even phone service.
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Invest in insurance
The right type of insurance can save you a ton of money in the long run, money that you could potentially need to shell out in case of a claim filed against you or your company. Professional liability insurance is one such insurance that you should consider obtaining when it comes to protect your business against claims. It can protect professional service providers from potentially devastating financial damages resulting from alleged negligence or error in the delivery of their services. With professional liability insurance coverage, you can save your organization and yourself loads of money and retain your reputation as well.
The premium for a professional liability policy will depend on factors such as:
- The industry
- Revenue size
- How long you have been in business
- Claims history
- Risk management procedures in place
- The amount of coverage desired
- Geographic location
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market your business online
If you haven’t started doing this as yet, you are missing out on targeting a large pool of potential customers who require your services/products. While traditional marketing cannot be ignored, you can get your small business noticed by a large pool of potential clients online. The best part is that online marketing is not expensive (unlike traditional marketing), and yet you have more chances of getting more sales from online marketing efforts.
To further reduce costs, increase social media usage while reducing traditional marketing, network more and advertise less, and build a customer email list.
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Invest in a freelance workforce
By next year (2020) 40% of the US workforce will be made up of freelancers. Freelance workers can save you tons of money. Firstly, you can avoid overhead costs and costs related to raining, sick leave, insurance, and vacation. You won’t have to invest in expensive office space. You can reduce business operation costs by having freelance teams working on a per-project basis. Which means, you only have to pay them for the project and not on a monthly basis. So if a project is two weeks long, you pay that for only that period.
Popular freelance marketplaces for any type of project include Upwork, Freelancer, PeoplePerHour, and Odesk.
Try deploying these tips in your small business and watch the changes occur. Changes will not occur overnight, but you will soon find that you are spending much less than you were spending before you employed these changes.
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Reduce operation costs
Small costs that occur on a daily basis can be taken for granted. Add up your everyday costs – no matter how minimum or negligible they might seem, and you will find that they total up to a fairly decent figure. Review your expenses on a regular basis, use association discounts whenever possible, and buy second-hand products such as recycled print cartridges. Go paperless and use your time wisely.
Sources:
Money Crashers. 2019. Cost-cutting ideas, small business expenses. [ONLINE] Available at https://www.moneycrashers.com/cost-cutting-ideas-small-business-expenses/. [Accessed 26 September 2019].
Quartz. 2019. 40 of America’s workforce will be freelancers by 2020. [ONLINE] Available at https://qz.com/65279/40-of-americas-workforce-will-be-freelancers-by-2020/. [Accessed 26 September 2019].
https://www.thebalancesmb.com/reduce-small-business-costs-2951415
https://www.moneycrashers.com/cost-cutting-ideas-small-business-expenses/
https://www.lifehack.org/articles/money/15-practical-ways-reduce-business-costs.html
