Minimizing your costs will improve your net income and increase the health of your business. Six great ways to reduce your business expenses are buy used furniture and equipment, reduce your office costs, pay invoices early to obtain discounts, reduce paper costs, use less expensive technology, and reduce unnecessary expenses.
Buy Used Furniture and Equipment:
There is significant depreciation in the first few years of furniture and equipment. Buying used furniture and equipment can save your company a significant amount of money. Look through Craigslist or Ebay to find used furniture and equipment for less. Local papers can also be a good source for used furniture and equipment. Another saving from buying used furniture and equipment is that used furniture and equipment is generally already assembled and working. Computers, printers, and faxes can all be bought used and will not reduce employees’ productivity. According to Forbes, another way to save money with furniture is to use minimal designs that reduce the amount of furniture you need. There are desks and other office furniture that are designed for people to work in close-proximity with comfort. Some of the furniture has noise reducing features; additionally, noise-masking speakers can be used to reduce sound levels.
Reduce Your Office Costs:
Reducing your office costs is one of the best ways to save money as office space can be one of the largest expenses in any business. Allowing employees to work remotely most of the time can reduce the amount of office space that you need. The amount that you will need to pay for other office related expenses will also decrease. Subletting some of your unused space can bring in additional revenue. According to Forbes, you can reduce office expenses by setting temperatures indoors closer to the temperatures outside. Also, using low-energy lightbulbs and solar power can reduce electric expenses.
Pay Invoices Early:
Many suppliers of good and services offer savings to companies that pay their bills early. Sometimes these savings can be up to five percent of the total amount. If you currently have suppliers that offer discounts for early payment, start to make those payments. If your suppliers do not offer discounts, talk to them to negotiate a discount for early payment. Many companies are eager to improve their cash conversion cycles and will work to make a deal. To give an example of an early payment discount, an invoice of 3% 10 Net 30 means that you may reduce three percent from your expense if you pay by day ten. Getting this reduction can be extremely significant to businesses with low margins.
Reduce Paper Cost:
Many companies use a ridiculously large amount of paper per employee when everything is available in digital form. The estimates of paper use for each employee for businesses in the United States is in the thousands of sheet. The cost of paper is not just the cost for the actual paper; waste collection, processing, and transportation of all these business documents can add considerably to expenses.
Use Less Expensive Technology:
Many businesses that have operated for many years are using more expensive technologies than needed. For example, VOIP based phones are significantly cheaper than regular landline phones. There is no need for a bulky fax machine as there are online services such as MyFax that will allow you to receive faxes without the need for fax machine. If your company uses a lot of travel, consider using WebEx or other meeting platforms as VOIP meetings can actually be better than in-person meetings because of the ability to share files. Free Cloud software such as Google Docs and Google Drive can save you money compared to using Microsoft Office. If your business has old thermostats, upgrade your systems to programmable thermostats to reduce the expense.
Reduce Unnecessary Expenses:
“Reducing unnecessary expenses can be a great way to increase net income,” said Microdynamics Group. Unnecessary subscriptions or unused technical capacity such as business bandwidth can be cut. When planning upcoming projects, you must decide if the projects have a positive ROI. The cost of any project should take into account additional future cash flow so that projects are producing a return. Buying unnecessary equipment or making upgrades to facilities can damage your total net income if the projects are not bringing in any additional revenue. If you need to buy items for your business, try to buy in bulk in order reduce your total expenses for the item.
This article has given you six easy ways to reduce your business expenses. One of the critical ideas to understand is that small expenses add up fast. It is important to regularly assess your business to see if there are ways to increase net income by reducing expenses.