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Every company has expenses they have almost no control over. What you consider to be a minor cost can easily become a financial issue if left unattended. After all, why should your business lose money if you can prevent it or at least reduce the loss to a bare minimum?
It’s the goal of every business to achieve good profits while minimizing expenses. That’s why reducing business expenses, whenever and wherever possible, is essential. The key to maintaining good financial health is in awareness and monitoring your incomes and costs.
The fact of the matter is that you don’t have to redefine your budget or implement some major changes company-wide to ensure an increase in revenue or a decrease in expenses. Oftentimes, it’s the simple things that can have a major impact on a company’s profitability. With that in mind, here are a few measures to reduce expenses in your business.
Manage your debts
Every business is in some form of debt. For instance, you either took a loan for new equipment or you have a few unpaid bills. Either way, debt is debt and if left unattended, it can become a major business expense.
Although running a business completely debt-free is next to impossible in today’s uncertain economy, you can implement debt management practices that will reduce the unnecessary expenses that are oftentimes involved.
Take late bill payments for example. You have to pay bills whether you like it or not. But, you don’t have to pay additional fees for being late. High interest rates and excess fees are the expenses you can avoid by being timely. If you don’t believe you’ll remember to pay your bills on time, you can always schedule automated bill payments and you won’t have to worry about it.
Reducing travel costs
Travel and business often go hand in hand, especially for business owners. Traveling to a business conference or an important meeting is important. However, what’s not important is to overspend on travel expenses and commodities.
Traveling by air is convenient but consider joining a flight service loyalty program for discounts. Another great option is to get a Standard Chartered Unlimited cashback credit card and earn a portion of the money that you spent back. Putting your biggest expenses such as flight and hotel on your cashback card will help you cut your travel costs significantly.
Cut down on overhead expenses
Overhead expenses, unlike operational costs, are necessary costs that will yield no return on investment (ROI). Although necessary, you don’t have to throw away money on overhead costs. If there’s a way to cut these costs down even a little bit, you should go for it. Overhead expenses include travel, bills, taxes, maintenance, repairs, advertisement, legal and accounting fees, utilities, rent, licenses, government fees and so on. That being said, here are a few ways to cut down on overhead costs.
- If you’re paying for landline but not using it, get rid of it.
- Use energy-efficient materials and green practices to lower your electricity bill.
- Find a better lease deal to reduce your rent, utilities and maintenance.
- Use automation to reduce administrative costs.
- Leverage time management practices in your company.
- Implement optimal inventory levels.
Outsourcing is a popular way to reduce business expenses and still get what you want. In most cases, companies spend a lot of money on maintaining entire full-time and in-house departments. A lot of companies cannot afford such endeavors, especially in the long run.
Fortunately, today you have outsourcing as an option. What it means is that you can outsource various business tasks to companies that specialize in those tasks. For example, you can outsource marketing, IT support, accounting, production, manufacturing and almost any other business activity.
The key, however, is in finding the right outsourcing partner. To avoid potentially wasting money on outsourcing, here are a few things you should consider.
- Research your potential outsourcing partner.
- Read online reviews about their services to determine other people’s experiences.
- Negotiate the price and be wary of hidden fees.
- Give your outsourcing partner a trial period before you decide.
- Always have an exit strategy if things don’t go as planned.
- Always have a contract ready when partnering with agencies.
Since outsourcing is so versatile today, you can find anything you need. However, just because something is cheaper, it doesn’t mean it’s better and vice versa.
Reducing business expenses can oftentimes be a major challenge. It’s not uncommon for business expenses to exceed incomes, especially if you’re not careful enough. That’s why it’s vital to monitor your incomes and expenses, as well as implement measures that will help you reduce any unnecessary costs.