Tips to Cut Cost When Running a Business

Save MoneyEvery business owner knows it costs money to make money. But the trick in maximizing profitability is to reduce operating costs when possible. Though some costs are fixed such a lease payments or mortgage installments, other costs fluctuate. These are known as “variable” costs because they change from month to month. Such costs are employee hourly wages, utilities like electricity and water, inventory, and accounting.

To keep a business running and in the black on the balance sheet, there are some costs which can be cut or mitigated with a little ingenuity and a degree of creativity.

Take Advantage of Shared Space

Committing to a long term or even short term lease is one way to guarantee future outlays. Purchasing a commercial property is likewise a huge obligation. Though in the latter instance, a business builds equity, that equity does not improve cash flow from month to month.

Instead, look for shared office space. These arrangements allow for greater flexibility and significantly lower costs. Rather than shouldering the burden of paying the rent, utilities and maintenance alone, shared space spreads those obligations over a small group, lessening costs for each participant.

Float in the Cloud

Office equipment is expensive. Worse, it depreciates over the course of time. Why most business owners choose to deducted such depreciation on their taxes, the cost is never recovered. Likewise, the cost of servers and hard drives becomes astronomical when coupled with maintenance costs.

But moving to cloud computing can solve many money woes. It doesn’t require dedicated staff to maintain and is available wherever an Internet connection is located. Business owners can upload, download, manage and edit data without having to enter a proprietary software program stored on a hard drive.

Moreover, it allows for freeing up work and office space. When document production is paperless, the organization is seamless and easy to keep under control. Accounting and compliance can all be done in the cloud.

Upgrade to Business Level Accounts

Business accounts for cellular phones, checking an other necessities often allow for greater access by more people with a lower price tag. Additionally, business level credit cards generally have reward incentive programs which allow account holders to rack up travel miles or cash. Many of these business credit cards rewards programs are associated with cards that must be paid in full each month, so you’ll want to pay attention to the finance terms as you’re determining what card is the right fit for your business.

Having business level accounts also means simpler accounting. Account providers generally offer free tracking services, documenting each employee’s usage.

Farm Out to Freelancers

When feasible, farming out work to freelancers is a great way to reduce costs. A business owner will receive the same quality of work without having to pay overtime, sick time, health insurance and unemployment insurance. Moreover, accounting is made easier when contracting freelancers rather than hiring more permanent or temporary employees.

Freelancers can also take on work when employee productivity hits its maximum output. This allows for getting more without more human capital commitment.

Ditch Flash for Affordability

Office furniture and supplies account for a significant portion of operating expenses. Those expenses can be reduced by opting for affordability over flash. Business owners will find great deals by visiting online classified services, attending auctions and going to liquidators. Thrift stores are another alternative to big box retailers and furniture supply specialty stores.

Cutting operating costs is not difficult if a business owner knows where to look. The savings realized then can be reinvested into the business to promote growth.About the Author
Nicole Rodgers has been blogging in the technology, business, and finance industries for three years. When Nicole was running her small business she made sure to provide her employees with great employee benefits. Nicole believes it is important to keep employees happy so they can be productive and enjoy the work environment as well. In order to keep employees healthy Nicole made sure to provide them with great health insurance as well.

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