5 ways to reduce costs in your small business
It’s a paradox as old as commerce itself: you have to spend money to make money. It works in the poetic world of maxims. But in reality? Not so much. When you start a business you quickly learn that to make (and keep) money you have to spend as little as possible. Reducing costs gives you the flexibility to rededicate funds to growing your business. But when you’re busy running the business, it can be difficult to pause and think about where you could be saving money. Thankfully, we’ve already done all the pausing and thinking for you. Here are five practical ways to reduce costs in your small business.
Virtualise your IT services
According to Allen Hall, senior virtualization engineer for Align Communications: “Virtualisation is certainly not just for the Fortune 500-sized companies. Even small businesses can use virtualization to reduce operational costs and increase application availability while enabling them to respond to changes more quickly.” Virtualisation is the process of creating software-defined versions of hardware-reliant systems and function. If your business has extensive IT infrastructure or you expect your IT needs to expand when your business grows, you should consider virtualising them. Virtualising your accounting, data storage and inventory management system streamlines all of those processes and services and cuts costs in terms of how they are set up and managed.
Outsource non-essential functions
Hiring freelancers and contractors for infrequent and/or short-term tasks can make a big difference to your business’ budget. It’s not uncommon for small businesses to outsource their HR and accounting processes to external agencies instead of managing them in-house. You can also hire interns for busy times like stock-taking or holidays. Virtual assistants are also a great way to streamline administrative processes such as scheduling, paying bills and project management. Effectively, if you outsource enough non-essential functions, you can run a one-person show but still operate like a fully-staffed business.
Pool resources with other businesses
The sharing economy is not made up only of consumers. Small businesses too are finding great value in pooling their resources. Whether it’s space, tools or staff, you can cut overhead costs dramatically by sharing. Cross-promotion (marketing another non-competing business’ products or services to your customers in exchange for them doing the same for your business) is another way you can drive foot traffic and generate sales without paying additional marketing.
Sharpen your negotiation skills
Negotiation is a survival skill for small business owners. You need to acquire a lot of resources on a limited budget and get the best out of every deal. Good negotiation skills not only spare your costs, they also build valuable supplier relations and open business possibilities. You should always do your research and go in with confirmed figures that you can back up. And you should always know what you are not willing to give up. Small business owners are usually negotiating from weaker a position. To make up for this, always put forward the first offer. By leading the negotiations, you tilt the scales, however slightly, back in your favour.
Invest in point-of-sale (POS)
The primary difference between spending and investing is that spending doesn’t imply greater future return(s). Investing does. Which is why getting a POS system is such a smart investment A POS system reduces sales times and increases productivity. It streamlines inventory, cutting down on fraud, loss and wastage. You can also track all of your sales and export them for detailed and accurate reporting. Download our EFTPOS brochure below to find out more about our POS products and start making (and saving) money today.