As we enter the last quarter of 2022, economic challenges and setbacks seem to be making headlines nearly every day.
Turbulent times call for tighter budgets. Or, rather, more efficient budgets. Small businesses can use the next few months to evaluate and find efficiencies in their finances to approach the new year with confidence and optimism.
Each industry and company has different needs, so there’s no one-size-fits-all solution.
Instead, we’ve compiled a list of six areas you can review to evaluate expenditures, reduce redundancies, and create an efficient, cost-effective small business budget.
Six Areas to Save Money in Your Small Business
Saving money in your small business budget is not only about ruthlessly cutting things out or being stingy. Sometimes cuts need to be made, but cost savings are more often related to increased efficiency and reduced redundancies.
Basically, you want to accomplish two things:
- Spend your dollars wisely, without wasting it on something you don’t receive benefit from
- Make your dollars efficient, where you’re getting maximum impact for every cent invested in the company.
Some of this comes down to getting all the fundamentals right—check out our guide here on 12 basic budgeting tips for small businesses. But once you’re passed that, consider these six areas you can investigate in your company to maximize every dollar and get your budget on track.
If your small business has a team of employees, you know how important the current conversation is around remote work vs. hybrid schedules vs. working in the office.
And no matter how your team operates, you can agree that flexibility gives you options. If you’re renting traditional office space, your business is tethered to a fixed, long-term contract. Even if your team doesn’t need the space, you’re stuck.
- Cost-savings opportunity: Flexible office space is a more cost-effective solution because it allows you to scale up and down as needed. You pay for what you need when you need it—no dollar goes to waste.
The systems, processes, and procedures that dictate your workflow also dictate your bottom line. For example, you may have purchased client management software to track sales prospects. But because of its poor UX (user experience), your team doesn’t bother with it and you lose out on potential leads.
Cost-savings solution: Review the software, apps, systems, and processes you use to get work done and ensure it’s working for you. Think about:
- Are you paying for something you don’t use (i.e., the software example above)?
- Are there any opportunities to outsource work that frees up time and energy for other tasks (i.e., hiring a virtual assistant to support administrative tasks)?
- Are there places you can automate workflow to save time (i.e., calendar or auto-responses)?
Looking at your company’s human resources is a way to save money in your small business budget. Having employees with the right skill sets, along with ongoing training and development helps save money through decreased turnover, fewer mistakes, and a more efficient team.
- Cost-savings solution: You might need to invest in upskilling your employees through training and education. It may cost more in the short-run but will pay dividends in the future with a stronger, more productive team.
The next area to evaluate is your suppliers and service providers. Some common examples include:
- Utilities, phone, and internet providers
- Office supplies or equipment
- Inventory wholesalers
- Service providers (i.e., IT technician, cleaning, repairs)
- Software programs
The list here is unique to your business. Once you evaluate current contracts and their value, you may see you’re not getting what you need out of them. Or, you may be paying over the current market rate for specific services and need to switch to a new provider.
- Cost-savings solution: Evaluate your suppliers and service providers to see what kind of value you’re getting from them. Then, either re-negotiate contracts or find new suppliers.
Another cost-saving option is to consider a flexible coworking space or private office with all-in-one pricing—utilities, internet, cleaning, office equipment, and virtual office services all in a single monthly membership price.
It might seem counter-intuitive, but paying employees more can actually save you money in the long run. It might not be immediately money efficient, but fair market wages will help reduce employee turnover and can increase productivity, both of which support the bottom line.
- Money-saving strategy: Conduct a thorough salary review and evaluate how offering more money may better support your company’s employee attraction and retention strategy.
We all know the old adage, time is money. And it’s true—a more efficient operation will ultimately make your company more money and support the bottom line.
One way to increase efficiency is to establish clear KPIs (Key Process Indicators). These are metrics that businesses keep track of to understand how you’re performing in relation to your goals. KPIs give you a good idea of what’s happening in your business relating to quality, staff productivity, turnaround time, expenses, advertising efforts, and many other areas.
- Money-saving strategy: Establish KPIs for key areas of your business, including expenses. This helps you stay on track and allows you to adjust as things change. You can check out these 10 small business KPIs for an idea of where to start tracking.
Saving money in your small business budget requires you to strategically evaluate and find efficiencies. Go through each of these six areas of your business to find places you can improve, so you can enter 2023 on a strong foot.
If you’re a small business owner in search of a cost-efficient flexible workspace for yourself or your team, book a tour of Co-Balt today.