13 Tactics for Saving Money on Business Expenses
“Beware of little expenses; a small leak will sink a great ship.” – Benjamin Franklin Money serves as the carry wheels of a business. If your business is on a...
"Beware of little expenses; a small leak will sink a great ship." – Benjamin Franklin
Money serves as the carry wheels of a business. If your business is on a shoestring budget, it is natural to feel concerned. After all, poor financing is one of the major reasons why a majority of new businesses fail in the first few years. But, at the same time, it is important to understand that there are multitudinous ways to save money on business expenses and you don't need to panic. Panicking only deteriorates your ability to make rational decisions and take appropriate actions to improve your situation.
Further, there are some leaks and crevices in your dam of finances that if you repair will save you a lot of money. So, relax and focus on them. In this blog, we'll together explore some of the common financial leaks and crevices that you can mend.
13 actionable tips to save money on business expenses:
Cut utility bills:
One of the simplest ways of saving money on business expenses is to save money on utility bills. How many times do your employees forget to switch off fans, lights, air conditioners, and other appliances before leaving their cabins? Obviously, multiple times. Then, imagine how much extra money you spend on utility bills? Surely, utility bills are draining a lot of your money.
Given that, it is imperative for you to take steadfast steps to reduce utility bills. These may include putting up posters to remind your employees to switch off lights, fans and other appliances before leaving their cabins and rewarding employees who come up with innovative ideas to reduce utility bills. Moreover, you should also try to maximize the use of natural light during the day.
Focus on user-generated content and word-of-mouth marketing:
Effective marketing is the foundation of business growth. If people know your business, your products, and your services, only then they'll approach you. If your business is hidden in a mist and is sparingly known to people, obviously you won't have many customers visiting you. Hence, effective marketing is of utmost importance. But, this useful tactic for customer acquisition is expensive.
According to Gartner, marketing budgets equal 11.2% of company revenue on average. That's huge, isn't it? If you also invest a lot of money in marketing, you'll be glad to know that you can reduce these expenses. Wondering how? The key is to focus on user-generated content and word-of-mouth marketing.
Both these mediums are the most influential mediums of marketing that reap enormous results. The reason why it is so is that your customers lead these marketing campaigns for you. When your customers sing praises for your products or services, people develop an inclination towards your brand. After all, if your customers appreciate you so much, there must be something special about your company.
Besides being the most effective channels of marketing, user-generated content and word-of-mouth marketing cost almost nothing. But, yes, to encourage your customers to put appreciation posts for you on their social media accounts and engage in word-of-mouth marketing for you, you have to captivate their hearts. Offering excellent customer experience, providing impeccable quality of services, and understanding and fulfilling customer needs are some of the best tactics to captivate the hearts of your customers.
Engage in extraordinary, empathetic, and innovative CSR endeavors:
Corporate Social Responsibility (CSR) is business self-regulation whereby companies strive to give back to the planet, environment, and society that play a key role in their survival. Whenever a company engages in a unique and fruitful CSR endeavor, it catches the attention of the media. This implies that shouldering extraordinary, empathetic, and innovative CSR endeavors is a key to attracting the attention of the media without paying a penny. The benefits of getting such publicity have multiplied today as people prefer to do business with companies that are socially responsible.
According to a report by Nielsen that surveyed 30,000 consumers in 60 countries, 66% of consumers are willing to pay more for goods from brands that demonstrate social commitment. Given that, if you attain publicity because of your CSR endeavors you are more likely to captivate the hearts of your target audience. In fact, consumers will extend immense support to your brand in all respects. So, engaging in extraordinary CSR initiatives is the key to saving money on marketing and enhancing your profits.
Purchase used equipment in good condition:
When you start a business, everything feels new and you aspire to purchase new equipment. This decision is driven by your emotions that say on your new venture everything should be new. But, if you purchase used equipment in good condition, you can save a lot of money. Why not try that?
The money saved will ultimately benefit your business in the long run. So, it's better to purchase used equipment in good condition. You don't have to go market to market searching for used machines. Today, you can easily purchase used machines online. There are multitudinous websites that sell used equipment online. Exapro, Machineseeker.com and Kitmondo are some examples of popular online websites that sell used machinery online.
Purchase appropriate insurance beforehand:
Life is unpredictable and so is the world of business. You never know when you might land into some unforeseen circumstances that demand massive expenses. For example, if a customer slips in your company and gets injured, you might have to bear all the medical expenses associated with the event. If a natural disaster hits your company, you might need a lot of funds for disaster recovery. Such situations can drain all your savings and even throw your business into massive debt.
To prevent losing your money to such expenses, it is best to purchase appropriate insurance beforehand. In times of need, insurance protects you. You don't have to make all the expenses yourself. Given that, it is sane to purchase appropriate insurance beforehand. General Liability insurance, Commercial auto insurance, Public Liability insurance and Disaster recovery are some types of business insurance that you should buy to secure your company financially in the long run.
Focus on employee engagement:
According to research, a single disengaged employee at the average salary level is going to cost you almost $16,000 per year. That's a huge amount of money. This amount includes expenses due to lost productivity, frequent absenteeism, poor quality of work and other issues caused by disengaged employees.
If most of your employees get disengaged, imagine the amount of money you'll lose. Having said that, to save money on business expenses it is crucial for you to focus on employee engagement. Engaged employees are true assets of your business.
According to Gallup, highly engaged teams show 21% greater profitability and are 17% more productive. This implies that engaged employees not only save you money but also enhance your organization's profits. Hence, it is extremely beneficial for you to focus on employee engagement. The following are some cost-effective yet powerful ways to enhance employee engagement:
- Appreciate and recognize your employees:
One of the best and cost-effective tactics for employee engagement. Appreciation and recognition are the most fundamental needs of human beings. The fulfillment of this need gives an inner joy and boosts self-esteem. By extending regular appreciation and recognition to your workforce, you can keep your workers engaged.
- Offer growth opportunities with mentorship programs:
Employees aspire for regular growth in their professional life. They detest stagnancy. Given that, to engage your workforce, you should offer growth opportunities with mentorship programs. Why only mentorship programs because they are usually no-cost. The senior members in your organization can coach the junior ones. This way, you won't have to bring specialized instructors to your organization.
- Foster healthy relationships between your workforce:
Good employee relationships promote employee engagement. Why so? When colleagues become friends your professional life becomes beautiful and fun. This keeps you in high spirits.
- Promote healthy work-life balance:
Work-life balance is crucial. If your work begins to interfere with your personal life, you begin to feel frustrated. Consequently, you start paving the path of disengagement. That's how it is. Hence, if your employees suffer from a poor work-life balance, they will become disengaged. This calls upon you to focus on helping your employees achieve a good work-life balance.
- Reduce employee stress:
Stress is one of the fundamental causes of employee disengagement. When your employees feel stressed at work, they feel agitated, irritated, and exhausted. Their physical and mental health suffers because of prolonged stress. All these things together push them into the pit of disengagement. So, you should try to work on employee stress management. Conducting stress management programs in the workplace, meditation sessions, and mindfulness exercises are some things that you can do in this regard.
Improve employee retention rate:
According to Gallup, the cost of replacing an individual employee can range from one-half to two times the employee's annual salary. If your organization has a high turnover rate, you can understand where your money is getting drained. When you lose an employee, you not only lose money in terms of his lost productivity, you also have to bear the costs of hiring and training the replacement.
Moreover, a new employee takes at least 8 months to become productive or match the efficiency of the one who left. Given that, it is crucial for you to focus on employee retention. This is one of the best ways to save your money on business expenses. Now, the following are some actionable measures that can help you improve the employee retention rate in your company.
- Derive regular employee feedback:
Employees don't necessarily leave companies for better growth opportunities. They also leave when they have some issues with their company or feel dissatisfied. To prevent employees from leaving due to unaddressed issues, it is crucial to derive regular anonymous feedback. This will help you understand employee grievances and address them to promote employee retention.
- Build an employee-centric culture:
Companies with employee-centric cultures enjoy high retention rates. That's natural. When your employees are a priority for you and all your decisions are filtered through employee well-being and comfort, your employees feel content and happy. Consequently, they stay with you for long periods of time. Hence, you should try to build an employee-centric culture.
- Check and eradicate micromanagement in the workplace:
Micromanagement is one of the biggest culprits behind high turnover. It slowly eats away employee productivity, engagement, and involvement in your company. To prevent a high churn rate, you should check and eradicate micromanagement at all levels in the workplace.
- Offer attractive benefits and incentives:
Employee benefits play a vital role in determining whether your employees will stay with you in the long run or not. Hence, it is best to offer attractive benefits and incentives. You can also personalize your benefits program to meet the individual needs of your employees. This can work wonders in promoting employee retention.
Learn new skills and try to manage small tasks yourself:
When you run a business, you have to hire multiple professionals to do things for you every now and then. For example, you might hire a consultant to write a press release for you or you hire a freelancer to do the cold mailing for you. But, ask yourself is it necessary to spend your money on hiring multiple professionals? Can you learn some new skills and try to do small tasks yourself? If the answer to this question is yes, why not learn new skills and save money.
Once you learn a skill, it stays with you. You can utilize it anytime. Imagine how much money you can save by learning to write press releases. Even if you have to spend some money to learn, do it confidently. Spending money once on learning is better than spending it, again and again, to get your work done by others. It is obviously not about doing everything on your own. But, you should at least try to manage some simple tasks on your own by learning new skills.
These days there are many free online courses available on the internet that you can use to learn new skills. Additionally, you can also learn new skills with the help of YouTube videos. So, why seek help from outside? Be your own savior and save money.
Use Free Software:
Today, software has emerged as a necessity. This is especially true in these times when remote working is in prevalence. If you also need some software for your company, don't simply buy it. There are websites like Downlod.com where you can download multitudinous free software. If you find free software that offers all the features you need, there is nothing better than that. You'll save huge amounts of money in the long run.
Did you know that adopting a remote model can save you a lot of money? As per Adela Belin from Writers per hour, If your employees work from home, you can save utility expenses, canteen expenses, and infrastructure expenses. As the pandemic has taught us that teams can work well remotely with appropriate technological tools, you can try establishing a remote model to save money on business expenses.
Obviously, this is possible if your workforce is capable of being productive remotely. But, there is no trouble in trying. Try once and see if your workforce functions well remotely. For many people, remote working improves their productivity, work-life balance and engagement levels. Even if your workforce exhibits some issues while working remotely, you can slowly address them and achieve success with remote working.
According to Gartner, approximately 3% of a company is spent on paper, printing, filing and the costs to store and maintain files of information. This implies that paper is not a cheap option. Additionally, an average office worker uses 10,000 sheets of paper a year. As paper is made from trees, imagine the number of trees cut annually to meet the need for paper across the globe. Given the extent of global warming, pollution we are experiencing, it is imperative for us to save trees. Hence, it is both cost-saving and environmentally friendly to go paperless.
You can switch to a digital invoice and bill payment system to save paper. Moreover, digital records are easy to maintain and secure. You should also avoid printing things on paper until and unless it is absolutely necessary. Even if you need some forms to derive employee feedback or customer feedback or something else, you should try to utilize free online forms such as Google Forms.
Do you still use a landline? If yes, it might be one of the biggest unnecessary expenses that you're shouldering. Landlines are expensive. If we compare VoIP and landlines, the latter is 40 to 80% costlier than the former on average. This implies that by switching to VoIP or other virtual calling systems you can save enormous amounts of money. Moreover, the cost of a cell phone is also lower than a landline. Given that, it is best to ditch landlines and switch to using your cell phone or other virtual calling systems. This is one of the best steps that you can take for reducing business expenses.
Buy office supplies in bulk:
Every organization needs some supplies to function. Stationery items, hygiene products, electronics, utensils are some examples. These supplies are needed from time to time. It is obvious that you can't do without hygiene products for a single day. The same is the case with many other supplies. When you know that you'll always need these supplies, it is better to buy them in bulk. When you buy products in bulk, you get a nice discount. Moreover, if you get to know about some sort of sale, you can save even more money and who knows the prices of some supplies that you need might go up soon.
Money is the most important requirement for running a business successfully. Without money, your company cannot survive. Hence, it is imperative to secure your business financially. The first step on this journey is to start saving money. There are multiple ways in which you can save money on business expenses. If you observe closely, you'll realize that there are multitudinous crevices through which your money is leaking, without your notice. Some of those crevices have been discussed above. You should try to take actionable measures to repair those cracks and crevices as soon as possible. Wish you All the Best.
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