If you’re like most small business owners, you do everything you can to cut your expenses so you can enjoy a greater profit. You may also get so busy that you don’t have time to sit down and consider business cost-cutting measures. Now that we have flipped the calendar over to 2019, we encourage you to consider some of the following simple ways to reduce outflows to improve inflows.
Renegotiate with Vendors
All business owners are in it to make as much as they can. That means that a company you regularly purchase from or have a loan with isn’t necessarily going to come to you with an offer of a lower price or rate. However, there’s no harm in going to them to try to get a better deal. This is especially true for your largest vendors. If you truly can’t afford a vendor’s service anymore, they are likely to offer you lower fees just to keep your business. Choosing a few vendors to attempt to renegotiate with every year can significantly lower your business expenses.
Purchase as Much as Possible in Bulk
Some small business owners assume this means that they have to join a warehouse club if they don’t have a membership already. While that is certainly helpful for business cost-cutting purposes, buying in bulk can be as simple as paying for subscription services annually rather than monthly. If a company you receive a subscription from doesn’t offer this option, don’t hesitate to ask for it. It also saves the other company money when it doesn’t have to bill you every month.
Automate as Many Functions as Possible
Does your business only accept cash or checks because you don’t want to pay merchant processing fees or process credit card receipts manually? Both cost you more time and money in the long run. We recommend spending several hours one day evaluating each process in your company to determine if automating it would serve you better. If you’re worried about leaving an employee with nothing to do, there’s a good chance freeing up his or her time by automating this task will lead to greater productivity with other job duties.
Keep Careful Track of Inventory
Keeping physical inventory can be a huge guessing game.You don’t want to buy too much and end up selling it as overstock at a loss, nor do you want too little on hand to meet your customer needs. However, purchasing less means having more money in the bank and having access to more liquid funds because your money isn’t tied up in inventory. Be sure to monitor your inventory carefully and often to ensure that you don’t spend any more money than necessary. If you still take inventory manually, consider upgrading to a software program or management tool that automates this process for you.
As always, Lowcountry Business Advisors in Greater Charleston, SC is available to meet with you to help brainstorm additional business cost-cutting ideas. We are small business consultants who strive to use our experience and passion to help business owners achieve their goals. Let’s meet for coffee and see how we can work together.