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5 Simple Ways to Save Money by Reducing Business Expenses

There are two main variables that will determine the profitability of your business: the revenue that is coming in and the expenditures that are going out. Controlling these two variables is essential to have a healthy, operating business.

For most businesses, the largest expenses include:

  • Personnel and benefits
  • Physical location
  • Capital equipment
  • Development costs
  • Cost of goods sold , including inventory.

Focus on controlling these expenses to make the biggest impact on your bottom line.

In order to keep your finances on track, you need to know how to reduce business expenses. Keeping expenses low is a crucial part of operating a business. To lower your business costs, try these five cost cutting strategies for small businesses.

  1. Simplify staffing costs

To lower your personnel costs, try these strategies.

  • Reduce your FTE by rewriting job descriptions based on needed duties
  • Hire independent contractors or temporary workers when needed
  • Go to a 4-day work week
  • Outsource your payroll, benefits and human resource functions
  • Hire a virtual assistant or answering service
  1. Lower your office building overhead

In order to reduce your office space expenses, consider these alternatives.

  • Talk to your landlord about renegotiating your lease. Most landlords would rather have a tenant paying a little less than having an empty storefront or office space.
  • If you have the space, consider sub-letting your unused space. Just make sure you discuss this with your insurance agent – changes to your property coverage may be needed.
  • Look at your energy costs. Save money by installing a programmable thermostat and put your lights on a timer. Purchase energy-efficient appliances and have an energy audit done and consider implementing the recommendations.
  • Turn off equipment when not in use.
  • Comparison-shop internet and telephone service providers. Or save money by bundling those services.
  1. Save money on equipment

Most businesses need equipment to operate, whether it’s a multi-million dollar manufacturing piece of equipment or a traditional copier, printer and shredder. The cost of new equipment can add up, so consider buying used office furniture or refurbished electronic equipment. Save money by finding devices that have multiple functions in a single piece of equipment.

  1. Protect your business from theft

Your business may become vulnerable to criminals, including cyberattacks. All it takes is a single compromised password to cripple your business. You’ll need to invest some money in security standards, but modern camera security systems are relatively inexpensive and educating your employees goes a long way toward protecting your online presence. Here are three steps you can take to protect your small business in the event of a security breach.

  1. Protect your business from other losses

There are many types of business losses that can drastically affect your business, such as:

  • Natural disasters
  • Lawsuits
  • Unexpected changes that cause your business to come to a standstill.

Talk with your insurance agent to ensure you are covered in the event of a viable threat. Ask about ways to reduce your rates such as selecting the same provider for all your insurance needs and committing to safer ongoing practices.

These tips will help you budget for expenses more accurately and, ultimately, lower your expenses. If you can do this consistently, while also increasing the revenue your company generates, your business will become more profitable. In order to be successful, keep focusing on ways to control your spending while making wise decisions that support the growth of your business.

Your business is unique, and so are the risks it faces. Talk with a Lanier Upshaw business insurance expert to learn more ways to reduce your business expenses and find innovative solutions for protecting your business so that risk never has a chance to undo what you are building. Contact us here today!