The general rule for every business is to grow revenue, maximise profit, and control cost. Whether you run a coffee shop, tech business, or established business, you will find yourself looking for ways to cut down your business expenses. Cutting down business expenses will help you save costs, expand the business, and grow.
Do you want to start a business but don’t know the business to start? Get 35 Booming Business Ideas And Step-by-step To Starting Them; A Strategic and Financial Breakdown Of The Most Lucrative Business In Nigeria.
Watch how you can reduce your business expenses here. Also, subscribe to our channel to get business ideas, tips and insights.
In this article, we will be looking at practical ways you can reduce your business expenses.
10 Ways To Reduce Your Business Expenses
Reducing Business Expenses Through Hiring
To cut down on your business expenses, hire smart people who don’t have many years of experience. People with many years of experience command a higher salary so, hiring smart people who are teachable, will cut down your salary spend.
While you are at it, ensure you keep your team happy. When employees are happy, it helps keep employee turnover at a minimum. This will save you the cost of training and onboarding new employees.
It does not cost much to keep employees happy. There are many ways to keep your team happy: making the workplace comfortable, the way you communicate to your team, and simple team bonding activities like going to the movies.
Another way to cut down business expenses is by outsourcing tasks that are not core to your business, and of which you do not have expertise. It helps to also use ad hoc staff during busy seasons.
On Attending Meetings And Events
Cutting down on physical meetings helps you cut business expenses. Sometimes, meetings that cost time and money to attend ends up being a waste of time and resources. The meeting can be held over the phone or using a Facetime app.
With technology, you can hold face-time meetings at scheduled times with partners, suppliers, customers, etc. Before I attend a meeting, I gauge the value I will be getting from the meeting, and if it is absolutely necessary to be physical at the meeting.
In terms of events and conferences, be strategic on the events you attend. It should be around your industry giving you the opportunity to market your product or services and also network with industry leaders.
Co-working Spaces Reduce Your Business Expenses
When starting out as an entrepreneur, start out from a co-working space (List of co-working spaces in Lagos). Co-working spaces are flexible and help in saving operational costs for a business. At a co-working space, you meet like-minded entrepreneurs whom you can bounce ideas off of as well. A co-working space offers the flexibility that helps you upgrade your plan as your team increases.
The settings of some businesses may not allow them to operate from a co-working space. For such businesses, if at any time you have more space than you need, you can rent it out to another business. The additional income will serve as a revenue source for your business.
Business owners often make the mistake of choosing prime districts for their office location. If your business model does not involve foot traffics from customers, you have no business renting an office space in expensive business districts. You can get office space in low-cost areas, and still fulfill your business purpose.
Watch Expenses Like A Hawk
Having a good handle on your business expenses puts you in an advantaged position of knowing realistically where you can make cuts, and save money.
Make it a duty to regularly watch your expenses. Are they increasing? Are they reducing? Is there a pattern? Are there cheaper alternatives to the bulk of your expenses?
Ensure you make your payments on time to avoid unnecessary interest rates that make a dent on your bottom line.
Going paperless will save business expenses in multiple ways. Above all, you save the cost of paper, ink, and the cost of buying printers and copiers.
When documents are sent via email, you save costs as well. For instance, the cost of buying postage stamps, shipping cost, and cost of envelopes. The business also becomes efficient in its time management as the time spent in filling documents are saved and used in value-adding tasks.
Additionally, you won’t need file cabinets which actually frees up office spaces that can be rented for additional income. Most importantly, you will be running a green business.
Do You Need That Paid Software?
Most software have free versions that in most cases, serve the same need as the paid versions. Certainly, brand name software charges a premium for the use of their products, but you can also find open source software that can do the exact thing at a cheaper rate or even free.
Another angle to look at it will be to evaluate if your business needs that paid software. For instance, a business starting out with 2 employees does not have to pay for HR management software.
Reduce Business Expenses By Bartering
Your business offers a service and another company offers a service. Therefore, you can barter service for service or product for a service.
When bartering, it is important that value is exchanged. So, before bartering, ensure you get the equivalent of the value of what you are exchanging or even more. For example, we can offer our virtual office address packages at ReDahlia (which cost N60,000 per annum) to an Instagram influencer and in return, she will advertise our business registration services to her followers on Instagram.
Following A Budget Reduces Business Expenses
A budget helps a business to see how much revenue and income is generated on a monthly, quarterly, and yearly basis. So, you can compare your expenses to your income.
With a budget, you can zero in on your expenses and explore ways to realistically lower them without hurting the normal operations of your business.
On printing, print only when necessary to save paper and ink. Also, print on both sides of the paper except when absolutely unnecessary.
In terms of office supplies, there has to be consistency in use as supplies may be stolen by staff. Instead of buying disposable plates and cutleries and constantly restocking them, why not buy real plates and cutleries. From experience, only a few things cause frustration to business owners as waste does.
Save On Energy
When buying appliances, pay attention to how much energy they consume. Encourage your team to always power down an appliance when it’s not in use and don’t leave the power on in an empty room.
Your Business Structure
Different business structures have different tax obligations. When you run a business as a sole proprietor (business name registration), you pay only the personal income tax without paying the company income tax. However, when you operate as a limited liability company, you will pay personal income tax and the company income tax.
Depending on the stage of your business, a particular business structure can help you eliminate half of your tax responsibilities. It is always advisable to consult a tax consultant before deciding on a business structure.
Let’s create visibility for your brand and put your business on the world map. Contact us today to make your brand the preferred choice for our audience of entrepreneurs and business leaders.
To keep track of our activities, follow us on Instagram.