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Many business owners don’t spend enough time actually looking at their outgoing expenses and finding ways to cut costs in a business. If they did, they’d probably be surprised at how much money we waste every month. From outdated subscriptions to consistent one-off purchases, the small things add up.
The problem is that cash-flow is the lifeblood of a business. If you aren’t sure of how much is coming and going from your business each month, you’re going to struggle to make wise financial decisions at a moment’s notice.
Two simple ways to cut costs for your business are:
- Get refunds for the stuff you have bought but don’t need
- Cancel subscriptions you might not have realized you were still paying for (or that don’t generate a high enough ROI!)
Once that’s done, you have to start getting a little more granular, and maybe even a little creative.
Aside from recurring expenses, here are some ways I’ve found to actually cut expenses for your business.
Cost Cutting Tips for Reducing Business Expenses
A lot of these might be similar to saving money on personal expenses, but they absolutely apply to a business as well – especially one run by a solopreneur or a business with only a few employees.
1. Bartering Services
Bartering is essentially swapping products or services with another person/business. So instead of paying someone to do something you need done, you can offer them your product or service for free (or at a steeply discounted rate).
I’ve always wanted to try this out with someone, and recently I was able to!
A local headshot photographer needed help with her Google Ads campaigns (RIP AdWords), and was interested in swapping her services. I desperately needed headshots, so I jumped at this opportunity.
It was a great experience – she got a lot of help with her ad campaigns, and I now have awesome headshots 🙂
2. Try Out Coworking Instead of a Full Office Space
Coworking spaces are popping up all over the world and becoming more and more popular. These aren’t just offices for millennial entrepreneurs anymore, huge companies are investing in these spaces to give their employees a more laid back place to work.
Some of the more popular options are WeWork, Regus, Industrious, and there are tons of local one-off spaces. So I highly recommend you just go to Google and type in “coworking spaces” to find the ones nearest you.
- Avoid a long lease
- Free coffee (and often beer!)
- Community gatherings (sometimes including free food)
- Free events
- Amazing networking opportunities with other business owners in your area
- Can get expensive if you have a ton of employees
3. Buy Used Equipment
Yes, refurbished computers are a thing – and I’m quite positive that’s what I’ll be getting next. You can save a couple hundred bucks, and the company has made the machine just like new.
Generally, the only difference between a new and refurbished item is the price and some cosmetic differences that happen from previous use. I think the only thing to pay attention to here is making sure you’re buying something that is “certified refurbished” to make sure you’re getting a good quality item.
4. Outsource Some Work To Virtual Assistants (VAs)
This is something I’m in the middle of trying to do. There are so many tasks that I don’t need to be doing that can free up time for the really important stuff – like working ON the business.
There are some great places to find people for one-off projects like Upwork, and even just asking around your professional network. You likely know someone who has a friend or knows someone who needs work.
Initially, this will seem like a way to spend money vs saving it – because you’re going to be spending money upfront – but the time it frees up for you to actually make more money is going to be a huge benefit.
Why do you think most billion-dollar companies have employees? The CEO doesn’t have enough time to do all of the lower-level tasks – they need to be spending their time on the stuff that moves the business forward.
Some platforms you can use are:
5. Build Systems to Save Time
If you’re recreating the wheel every time you pay your quarterly taxes or onboard a new client, you’re wasting time. And wasting time means you’re wasting money.
Set up systems for those processes and you’re going to save yourself from having to do it yourself or save yourself from having to pay someone else to waste their time. Might as well hire a VA to build these systems while you’re at it 🙂
An easy place to get started building out your own systems could be the next time you complete a simple task.
I just paid my quarterly taxes last week, and I spent the extra 3 minutes to note what sites I use to pay them, and screenshots of the process. Government websites are not built with user experience in mind, so in the past this would take me about double the time to figure out where to pay these online.
Now I have a system (i.e. a Google Doc with screenshots and a few links) in place to save me time next quarter.
I’ve also been using Process Street to keep client onboarding documents up-to-date. The service makes it super easy.
6. Be Smart With Marketing
Marketing is a huge rabbit hole you can spend a lot of money and a lot of time on if you’re not careful.
I may be a little biased, but I think the time and money spent on either hiring someone to help you, or paying for a few hours of a marketing experts time is invaluable when you’re getting started.
Things change constantly, and if marketing is not something you are knowledgeable about, it probably makes sense to at least get some advice before spending money in the wrong places.
Just like with legal and financial issues – does it make more sense spending all of your time learning tax law, or hiring a CPA and attorney for a few hours to advise you on the best path forward?
I recently had someone come to me telling me they had their intern set up their Google Ads account. I looked into it and they had been paying for ads that were targeting the entire US (did I mention this was a local brick and mortar store with no online sales channel?).
She had been wasting between $500-$1,000 a month for the last 6 months because she let someone who didn’t know what they were doing set up the account.
7. Use Your Local Library
Libraries are something most people don’t even think about anymore until someone on Twitter goes on a rant about cutting funding for them or shutting them down altogether – god I hope not!
I use libraries so often – I’m always returning a book, picking one up, or placing something on hold.
But they offer so much more than just paper books. Here are some other services you may not have known your library helps with:
- Free ebooks/audiobooks. Most libraries have partnerships with eBook platforms like Hoopla and Overdrive. You can even borrow many audiobooks for free as well.
- Free Business trainings
- Helping with market research (yes, librarians will even do it for you!)
- Gathering demographics data
- Discounts on events in your area
- Space rentals
I even heard someone mention that their library offers a video/audio recording booth. Hello, free space for podcasting!
8. Take Advantage of Discounts
Whether you realize it or not, a lot of the communities you are a part of offer some kinds of discounts on local and national businesses.
I live in Philadelphia, and since I sold my car a few years ago I take public transportation regularly. Our public transportation system also has discounts on local businesses.
Some of these include restaurants, coffee shops, and even 2 for 1 baseball tickets. If you are in sales (which we all are, if we’re honest) and take clients out to dinner or the game to try and seal the deal, instead of paying full price for everything, why not use some of these discounts.
Now of course, you might not want to be super obvious about it, but in general you can save money on a lot of things you might not expect.
I graduated from Arizona State University and know they offer discounts on all kinds of things for me as an alumni. Some of these benefits include:
- Life insurance
- Health insurance
- Cell phone coverage discounts
- Discounts on computers, cell phones, and cameras
- Hotel discounts
Now these might not be huge discounts, but $50 here and there certainly adds up.
Chamber of Commerce/Local Networks
Being a part of a local organization, or a national organization at a local level can also introduce certain benefits to you. Some of these groups are the Chamber of Commerce, Sustainability networks, BNI, etc. Not all of them in every area will offer discounts on things, but some will.
I’d also check out your business credit card to see if there are any other discounts you can get.
9. Using Facebook Groups
There are so many great Facebook groups out there in the world today. And most of them are free to join.
I’ve learned a ton from the groups I’m a part of. I also landed my first client through a Facebook group!
Here are some of the great things you can do by using Facebook Groups:
- Build your personal brand
- Communicate with potential clients
- Learn the latest tips and tricks
- Build a new skill
- Make new connections
- Create a mastermind group of likeminded people
You can literally save thousands of dollars by being active in certain groups as opposed to spending money on every new course you want to take.
These are also incredibly helpful in staying on top of the trends in your industry, what’s working, what’s not, and for getting advice on something you might be looking to test.
I’d recommend carving out at least 20 minutes a day to jump in there and offer value where possible. Once you’ve been helping others for a while, you can jump in and ask for your own advice. But make sure you give first.
10. Swap out Subscriptions with Fixed Price Options
I mentioned the evilness of subscription services above – they can really impact your bottom line.
There are often alternatives to those items that are fixed price, as opposed to ongoing monthly payments. And if you have to keep paying for the service over and over again, see if you can’t pay up front once a year, or even once a quarter.
Oftentimes companies will offer a discount to people who pay in one lump sum because it makes their revenue streams more reliable.
11. Negotiate with Suppliers
There are going to be costs you can absolutely justify, but have you tried negotiating with that supplier yet? This can be applied to subscription services, office services, etc.
This can be especially effective if you are using a high volume of their product/service, because they can generally offer “bulk discounts.” Instead of a price cut, you might get additional features of services from their company, which can help you cut costs in other areas.
Getting a discount can be as simple as calling them up and spending 10 minutes on the phone asking about discounts they might offer. If that makes you nervous, send over a quick email asking about your options.
It might seem overwhelming to ask someone to lower their price, but it can end up saving you hundreds or thousands of dollars each year.
What’s the worst they can say? No?
12. Don’t Look at AppSumo (sorry, Noah!)
One of my biggest business weaknesses was AppSumo purchases. If you’re not familiar, this a company that offers lifetime deals on a wide variety of services for businesses – most of which are software.
It’s a great option if you actually need these products, but I was justifying each deal they offered because it seemed like something I could use in the future – after all it’s generally around $50 and you get a lifetime deal – meaning no monthly payments! How does it get better than that?!
But I never end up using half of them. I was buying software that could track video views, where people came from, and help you upsell products – but I wasn’t even making videos!
Now I make absolutely sure this tool is either replacing something I’m already spending money on, or is going to have a solid ROI in the next 60 days. Otherwise, I don’t purchase it.
Appsumo is great, if you have self-control.
13. Unsubscribe from Emails
This might seem a little out of the ordinary, but if you’re like me you’ve ended up on a million great email lists over the years.
A lot of these provide value, but then when the person goes to launch a product, I get sucked into their marketing funnel and sometimes end up buying the course or service – even when it’s not my focus for the business at that time.
I’ve found that unsubscribing helps me avoid wasting unnecessary money – and saves me time even when they aren’t selling anything.
Reading a ton of emails does NOT move my business forward.
14. Ask for Referrals
One of the great ways to cut expenses in terms of marketing and prospecting is to ask your clients for referrals.
The people you’ve already helped are (hopefully) willing to sing your praises, or refer you to someone they know who could benefit from your product or service.
This can save you a ton of money and time that you would have otherwise spent looking for new clients. Plus, the referrals you get from past clients are more likely to have a level of trust with you and more easily turn into a sale.
15. Improve Your ROI
Save More Time
While this post is about saving money, sometimes spending a little money to get a lot of return is worth it.
If you spend 4 hours a month calculating your financials and making sure you have you profit and loss statement correct, it might be worth it to invest in a tool like Quickbooks.
You can spend $10-$30 a month (depending on the plan you choose), and save yourself 3 of those 4 hours. That sounds like a killer return on your investment to me. I’d hope your time is more valuable than $3-$10 per hour.
I posted a review of the Quickbooks Self-Employed Vs. Small Business for you as well.
Look for the Upsell
If you already have paying clients, why not see if there isn’t an opportunity to provide them with more value, and increase your profits?
There are often small tasks or improvements you can make that can really help your margins. Take a few minutes and brainstorm a good opportunity to upsell or even cross-sell your client on that would be a no-brainer for them.
16. Who Cares If It’s a Write-Off?
Don’t put your business in jeopardy because you think that being a big, bad entrepreneur has earned you the right to have nice things.
Just because you can expense something, doesn’t mean you should.
If you just started your business a few months ago, it’s unlikely you need a $900 desk chair and a brand new computer. Unless you can seriously show that those things will improve your profits, skip the expense.
Be realistic and recognize that the business expenses cut into your profits, and your salary.
17. Hire an Accountant
An accountant (a well-qualified and specialized one) is going to be able to find you tax breaks and will probably end up saving you more money than if you had just done the taxes yourself.
Even if you’re an accountant in another field, there is something to be said about people who know your type of business inside and out. And they’ll likely find loopholes you didn’t realize were there. Now, that last part sounded a little shady, but I didn’t mean it that way. There are just so many tax breaks small business owners don’t realize exist.
Remember, just because something is a write-off, doesn’t mean you don’t have to pay for it. That’s like when people get mad that if they make more money their taxes are higher – yes, but you’re also making more money. 🙂
Finding ways to cut costs as a business owner is going to save you a lot of headaches down the road, especially if you lose a big client, or as the economy goes through another downturn over the next few years.
Coronavirus, cough cough.