11 Simple Steps to Lower Your Monthly Business ExpensesRieva Lesonsky
If you’re facing cash flow problems, you need to increase your monthly income or reduce your monthly outgoings. (Of course, encouraging customers to pay quicker can make a significant difference, but this isn’t always practical.) If you’re struggling, talking to an alternative finance lender can make all the difference, as they can assist with emergency loans, asset-based finance or invoice factoring and discounting, which enables you to borrow up to 85% of the value of your invoices as soon as you issue them.
But how can you get your business expenses down to the bare minimum in order to increase your profitability?
1 Slim down your team.
Making people redundant is one of the most unpleasant tasks facing any employer, but if you’re overstaffed you may have little choice. Determine which of your employees are central to revenue generation and which are peripheral, and consider carefully whether you can replace any team members with freelancers, who may cost more but will only be paid when you specifically require them.
2 Try to lower your rent.
If your lease is expiring, you could consider moving to cheaper premises or negotiating a lower rent to renew. Unless your business is in retailing, you could also consider dispensing with office space entirely and having your team work virtually – which also means no utility bills.
3 Reduce your utility bills.
Talking of utility bills, energy costs may be rising but your payments don’t have to. Turning down your office thermostat by one degree will make a huge difference, as will investing in more efficient air-conditioning and energy-saving light bulbs. You’ll also be helping to save the planet by reducing your carbon footprint.
4 Trim travel expenses.
Some meetings have to take place face-to-face. Others can be executed equally well via videoconferencing. Where travel has to take place, ensure that your people book budget hotels, take advantage of travel offers and keep subsistence to a bare minimum rather than having a holiday at your expense.
5 Monitor mobile phone usage.
It’s not so much that your people will be running up huge bills making personal calls (though this can happen) – choosing the wrong tariff can cost you a fortune. If your people are regularly going over their allowances, consider a monthly package with more free minutes. Conversely, if lots of minutes are going unused you should switch to a cheaper tariff.
6 Pay less corporation tax.
This might sound a strange suggestion, since none of us get to choose the rate of tax we pay, but there are plenty of legal ways to reduce your tax bill and thereby increase your cash flow. You can find ten of the best here.
7 Slash bank charges.
Since the financial crash of 2008, banks have been looking for new revenue streams – and increasing charges has been top of their list. Carefully review your bank’s charges and see whether you can negotiate a reduction or save money by switching to another bank.
8 Change your telephone service.
Changing phone providers or switching to a different tariff could save you a substantial sum. Alternatively, by using VoIP (Voice over Internet Protocol) to make calls, you could reduce costs significantly.
9 Reduce your credit card interest.
If you’re a longstanding customer of your card provider, and if you’ve always made your payments on time, you’re in a strong position to negotiate a lower interest rate. Alternatively, you could switch to cards with a balance transfer offer, enabling you to avoid interest charges altogether for several months – or potentially even years.
10 Review your insurance.
By reviewing your insurance needs, renegotiating and if necessary changing providers, you can potentially save hundreds of pounds every year. How come? It may well be that you’ve opted for insurance covering eventualities that will never arise or have entire policies that are of little use to you. An expert broker will be able to point you in the right direction and make sure you only pay for the insurance you need.
11 Outsource HR and payroll activity.
If you’re a small company, the salary of an HR Manager and payroll specialist can be a significant drain on resources. Alternatively, if you’re a very small company, you may have assigned these responsibilities to people who could otherwise be concentrating on revenue generation. Either way, you could benefit significantly from outsourcing these responsibilities to specialist firms.