As we learned in the year 2020, we never know when business in America could take a dark turn. When the COVID-19 pandemic hit, many companies had to close their doors or turn to drastic measures to stay afloat. Many businesses cite part of their current survival on their rainy day fund. Implementing cost cutting measures as a small business owner could make all the difference when unforeseen circumstances arise.
If your small business struggled during the pandemic, then you need to learn from the past and start making the proper plans to cut costs in case the unforeseen were to happen again. Doing so is easier than you may think. Take it from the airline industry, for example — all it takes is cutting some unnecessary costs, talking to the right people, and thinking about how you do business.
When it comes to saving money, every penny counts, and by going green, those small savings can grow over time. Start simple by changing over to LED bulbs that can both save energy and costs since they can last 25% times longer. Regardless of the type of bulbs you are using, turn the lights off when you are not in the room to avoid waste. Also, be mindful of the amount of heat or air conditioning you use. To avoid overuse, never set the thermostat below 72 degrees or over 78 degrees and consider a programmable system that can turn off the air when the office is empty.
Next, it’s time to think about going digital to use less paper, which not only overloads our landfills but also wastes money that you don’t necessarily need to spend. Take the time to create processes that eliminate the need to print paper, such as having PowerPoint presentations during meetings instead of handing out paper flyers. If you must print some paperwork, invest in a dual-sided printer so you can use less paper. When bringing in new customers or members, make the process digital, and avoid physical mailers.
You can also save a lot more money and paper by going 100% digital with your company and relying on the cloud. While this may take more work upfront, you can save major bucks by eliminating your physical office space and moving to a remote workforce. With the cloud, all software programs will be online, and employees can access data and collaborate seamlessly. That way you can cut down on the cost of rent, utilities, office space — and still keep business flowing.
Think About Your Employees
Now that your office is clean and efficient, think about how you can save money from an employee standpoint. Start with who you already have on staff. Is it possible to move from the standard five days schedule to a four days a week schedule with 10-hour days? If you can do something like that, then you can cut down on electricity and utility costs. Plus, if you have more people working at once instead of being spread out, you could save on staffing costs as well.
When it comes to hiring new employees, the choices you make could save you big money. One of the biggest choices in the hiring process is how you train your employees. Linkedin even suggests that by failing to do so can make your business lose money in the long run. Training may feel like a waste of time and money, but without it you have unhappy employees and unhappy clients. Additionally, this eventually leads to high employee turnover rates.
You may not think of it often, but the price of employee turnover can put a big dent in your rainy day fund. If an employee is unsatisfied and leaves, you then have to spend time and money recruiting, hiring, and training the new associate. You can cut those costs by ensuring employee satisfaction through benefits and perks. See what your business can afford as far as vacation time and health and wellness offerings, including health insurance. Show your employees that you value them, and they will stick around longer and refer other high-quality candidates to your organization.
Reducing Office Costs
Typically, your lease and the required office space to run your operation will take the biggest chunk out of your budget. If it’s impossible to move to the cloud or a remote workforce, then see how you can save money in other regards. Start by having a conversation with the landlord. If you have been a tenant for a while, you can ask about a discounted rate to keep your business in their building. If you are new to the building, ask about discounts for new renters.
If your staff is not filling your entire office space, then you could look into the possibility of sharing an office with another company. You could organize this by either having both companies in the area at the same time or working out a schedule where your employees work in the morning and the other company employs a night shift. This way, the other company can share rent and pay for expenses and save you a bundle.
While we have discussed many ways to save money, it may be inevitable that you will lack funds and need extra capital that will require you to take out a loan. However, you may be caught in a catch twenty-two and lack the credit score needed to get that loan. If this is the case, then you can still acquire a loan, it will just have a much higher interest rate, and you may have to provide collateral or a hefty deposit. If you are really in need of the money — and only as a last resort — try securing a personal or payday loan.
As a small business, your bottom line is everything, and there is seldom wiggle room for extra expenses. However, with some smart budgeting and a careful allocation of your resources, you can see more profit and save money for when you need it most.