It has become abundantly clear that the economic effects caused by the pandemic will be felt for a long time. More and more small businesses are shutting down because they are not making enough money to stay afloat. Many of these entrepreneurs are unable to afford the option of doing a full 360 to make their businesses digital.
The businesses that have survived have done it primarily by minimizing their operating expenses. As a startup, reducing expenses and maximizing profit is the key to staying in business, at least for the first few years. The goal is to experience exponential growth while still positioning your business to thrive.
It’s easy to go into panic mode as a business owner and decide to close down your business until the pandemic is over. However, before you do that, follow these helpful tips to reduce your business expenses.
1. Use Shared Office Space
Most startups are founded by one or two people with initial investments from friends and family. That said, you probably don’t need that big office space. Understandably, you want to have room to grow, but that may take a longer time than expected, considering recent events. An ample office space probably costs thousands of dollars per month, but you can cut that cost down using shared office space.
2. Take Full Advantage of Technology
Research has shown that technology can save businesses chunks of money by using open-source software, virtual training, digitizing documents, and numerous other resources. To benefit the most from technology, you must analyze your business processes to see which ones will work best-using technology.
For example, open-source software is common among startups because it doesn’t require a financial investment. Most types of open-source software will fit your business needs. They provide features such as spreadsheets, presentation graphics, word processing, and much more.
Technology also allows you to share information with your workers instantaneously. You can also take advantage of virtual services like virtual assistants, who do everything a typical assistant does, but online, at a more affordable rate.
Virtual services are also ideal because you hire people on a contract basis. Contract workers can still work the same hours as full-time employees but without employee benefits such as insurance, payroll taxes, personal days, and stock options.
3. Renegotiate Where You Can
The economy is sluggish. No one wants to be out of business, including suppliers, landlords, and other vendors. Like you, they would rather renegotiate their prices to help your business stay afloat while still achieving profitability. You can start by renegotiating your office rent. Software providers are also willing to cut the price of subscriptions so that you can continue using their products and services.
Since you are not leaving the house often, you can consider switching to a more affordable auto insurance provider like Freeway Auto Insurance. Freeway Insurance is well known for working with clients to offer the best coverage for vastly affordable premiums.
4. Keep Essential Working Tools Only
You probably spend a lot of money on software and other vital services necessary for you to use as a business. Before you start canceling subscriptions, you must list all the tools you use for the business and their cost. Next, determine which tools you use daily, and more importantly, the ones that the company can’t do without. Ensure that these tools actually add value to the business before you keep paying for them.
A common mistake most startups make is paying for software or office tools that have the same function. When you list all of them, you will discover the overlap and that no one in the office needs duplicating tools. Removing these and any unused tools is a great way to reduce your operational costs.
5. Reconsider Big Investments
It is likely no longer ideal to invest in a large amount of inventory. Your revenue projections are not the same as before the pandemic. You don’t want to be left with large boxes of unsold units in storage. The best thing for startups to do right now is to work with smaller amounts of stock and adjust each product based on customer feedback. Once the economy is fully recovering, you can produce your inventory in bulk and distribute it to the market.
It is apparent that the effects of the pandemic will be felt for the foreseeable future. This means that the business environment will remain challenging, ongoing. The good news is that with the above-captioned tips to reduce business expenses, you are being proactive to survive and eventually thrive.