Whether your business boomed or struggled in 2019, next year brings a clean slate with new challenges and opportunities. As you look back on your successes and mistakes, use the holiday season to trim the fat from your budget and enter the new year on the right foot.
Check out these seven areas where you may be overspending:
1. Stock and Supplies
Do you buy everything on your own? If not, you’re missing out on the benefits of membership in a group purchasing organization (GPO). By leveraging the buying power of multiple businesses, GPOs help companies get better deals from suppliers. This empowers members to spend less money on the same supplies. Think of it like Costco for your company. Bigger organizations with more members have more clout, but group purchasing allows you to scale quickly and avoid renegotiating contracts in the future. After paying wholesale prices for items your company uses or sells every day, you can reinvest those savings in other areas.
Need some new expertise, but don’t have the budget to hire additional staff? Consider hiring freelancers to save money without sacrificing quality. Full-time employees carry hidden costs, like benefits and training. Freelancers charge clear-cut rates and can start contributing right away. Thanks to technology and the popularity of remote self-employment, you can find freelancers of all ability and experience levels on the open market. Don’t replace your entire workforce with contract hires — you still need in-house people who know how the business works from within. Do, however, outsource when possible.
3. Local Partnerships
If you do business with other local companies, work out mutually beneficial partnerships. For example, if you order pizza for your team on Fridays, strike a deal with a local pizza joint. You could get a bulk discount in exchange for guaranteed order volume. Think up creative ways to provide value to both parties. Business bartering may not work in every scenario, but trading SEO services for small equipment maintenance may be just the thing for you and your partners. You can’t make deals without friends, though, so make a point to network with more business owners this year.
4. Office Space
Not everyone needs to work in the same building. In this age of remote employment, many of your team members may prefer to work from home. Save on office space by signing a shorter lease or choosing an option a few miles outside the city’s business center. You could also explore the benefits of running your business in a co-working center. Real estate isn’t cheap; the less of it you use, the more money you’ll have left over for other expenses.
5. Technology and Software
How many different tools do you use? How many cost money? Use as many free software options as possible, especially when paid versions come with unnecessary features. Google’s suite of office tools comes completely free to handle the basics. PCMag put together a list of free tools for small businesses, covering everything from HR to website design. Implement the pieces that make sense for your company, and upgrade to paid versions where necessary. Enjoy the savings you discover as you cut the bloat.
Your most powerful marketing advantages may also be the least expensive. Lean heavily into low-cost, customer-centric channels like social media, email, and content marketing. Engage constantly with your fans online. Talk to the experts within your company to generate content. Then, promote that content through low-cost channels, like your email list. You can build that, in turn, by converting web traffic into subscribers. To build your reputation and get your brand name recognized, engage with other companies and industry influencers in online spaces where your audience already congregates.
Unless you run an accounting firm, you probably don’t maximize your credits and deductions on your taxes every year. Spend a little to save a lot by working with a tax professional in your area. Look for a partner who not only helps you file, but also advises you on best tax practices. You could be missing out on credits for turning your office green, donating services to nonprofits, optimizing your assets’ depreciation, or a million other things. During your search, speak to a lawyer as well to make sure you don’t have any obvious exposure to liability.
Once you optimize your company’s spending, don’t let all that new cash sit unused in a savings account. Reinvest your savings into your company’s growth. Spend your money on good long-term investments, like valuable tools or prime real estate. With practice, you’ll become an expert at boosting your company’s bottom line through smart savings.