The goal of every business is to make profits while reducing costs. But unfortunately, many business owners in Australia tend to focus more on making a profit and less on reducing costs.
No matter how much profits you make, failing to tackle rising costs in your business would make it appear like you made no profit. So to balance the scales, you need to figure out how to cut costs and spend less. And how do you do that without compromising your business operations?
We have listed a few ways below. These steps or tips are designed to help you reduce expenses and save more.
Get Rid of Discretionary Spending
Rather than invest $5,000 to $8,000 in painting your building, team perks, or hiring extra employees, why not use the money to conduct crucial marketing or other essential tasks that could produce more profits?
By getting rid of discretionary spending, you can free up more cash that’ll help in financing non-discretionary spending. Imagine investing $10,000 meant for office improvements into expenses like rent or utility bills? Of course, office improvements are necessary, but rent or utility bills are more important.
Remember, discretionary expenses are those a business can survive without, while non-discretionary expenses are non-negotiable expenses. So always ensure you invest more in the latter to cut costs and save more.
Ask for Discounts from Regular Vendors
Don’t be ashamed to request discounts from regular vendors. They won’t give you discounts if you don’t ask. So, make a list of vendors you do business with often, and ask each one for good discounts. Not all will agree to your request. In fact, they don’t all have to agree. If you can get 40% off regular vendors to agree to your discount, you’ll save money that can be invested into your business.
So, how do you successfully request discounts from vendors?
It’s quite easy!
When asking for a discount, ensure you add both the percentage of the discount and the total price you would eventually pay. Experts often request discounts with an odd percentage number, like 5.3%, 7.3%, etc. Doing so shows the vendor that you have taken the time to go through their proposal and have a unique counteroffer.
Consider Outsourcing Business tasks.
Whether you are a small business or medium-scale business, outsourcing some business tasks will benefit your business in many ways. And contrary to what some business owners think, outsourcing your business tasks wouldn’t drain your business finances. In fact, it will save you more money in the long run.
So if your accounting tasks seem to be consuming a lot of your time and money, you can consider outsourcing it to the best accounting services in Australia. Doing so will help you save costs and ensure that your business has access to finance and accounting experts, etc. Other common business tasks to consider outsourcing are:
- Human resources
- IT help
- Payment processing
- Customer service
- Administrative tasks
- Marketing
Buy More Carefully
No matter how keen you are to cut costs, you’ll need to make certain purchases for your business. However, that doesn’t mean you shouldn’t consider saving money on those purchases.
You can save cash by purchasing things in small quantities and negotiating lower prices. But, don’t expect the process to be easy as prices often fluctuate. Regardless, that shouldn’t deter you from trying to negotiate lower prices.
Focus on tough periods when looking to negotiate for lower prices. During such times, suppliers are often eager to accept lower prices (especially from companies that pay early). When negotiating lower prices, you should also target basic expenditures like phone service, electricity, copying, etc.
You can save your business a lot of money by successfully negotiating lower prices on a few of those expenditures. Make sure you don’t enter into a long-term contract with the first vendor who offered you a sweet deal so you can easily switch allegiance should another vendor decide to offer you a sweeter deal.
Go for Cheaper Credit Card Processing Service
Does your business accept credit cards? If so, you may be spending too much on processing fees. Of course, you can cut costs by going for a cheaper credit card processing service. However, since many banks quote a confusing menu of charges to handle varying credit cards, comparing prices can be a huge headache.
Rather than subject yourself to such stress, here are a few tips to consider when searching for cheaper credit card processing service:
- Select the right payment processor for your business
- Ditch banks and use merchant service provider
- Use a mobile payment processor
- Avoid long contracts
- Eliminate non-essential services
- Negotiate discounts
- Go for flat-rate pricing
- Restrict the cards you accept
- Set minimums for credit card purchases
- Give cash discounts
While searching for a cheaper credit card processing service, ensure you have quality in mind. Go for a processing service that offers quality services at an affordable rate, not one that offers terrible services at a cheaper rate. If you go for the latter, you’ll spend more and lose clients, which is bad for your goals and your business.
Don’t Pay for Equipment You Don’t Need
When your business is booming, it’s easy to purchase or lease expensive equipment like cars, trucks, electronic gear, etc. Take a careful look at everything you have, especially the items you are still paying for. If you have items you don’t need, sell them. Even if you sell a vehicle for less than you owe and must make up the difference to settle the loan, you’ll often net large cash savings in the future. And if you need the item occasionally, you can consider renting it by the day for a lesser amount.
Also, don’t forget leased equipment. Are you leasing equipment that isn’t essential? Consider speaking to the company to renegotiate payment or end the lease and return the equipment. If the company fails to consider your request, don’t be scared to contact a lawyer who should explain the consequences your business will face if the company doesn’t consider your request. If the company believes that you might close down and file for bankruptcy, it will make a better offer or accept your request to return the equipment.
Conclusion
Profits made in a business would be less significant if the business fails to cut costs as the costs will eat into the profits, making it appear like the business isn’t doing well financially. Ensure you carefully scrutinize all business expenses and cut off unnecessary expenses. Don’t limit yourself to the tips mentioned above. You can do more. However, ensure your actions don’t affect the smooth running of your business.