You’ve heard the saying “it takes money to make money,” but are you missing easy opportunities to cut unnecessary spending?
Take a cue from a few budget-savvy business leaders. Here’s how they identified and eliminated their biggest wasteful expenses — in the form of tips designed to help you do the same.
1. Don’t equate a lack of office space to lower costs. Working from coffee shops and cafes is a common way to eliminate the cost of leasing office space. But don’t assume it’s always the best financial option.
“I would work all day at a cafe to avoid family distractions,” says Jason Swett, CEO of Snip Salon Software. “But the cost of daily coffee and lunch added up to more than $400 a month. To eliminate this major expense, I bought a membership at a co-working space for $75 a month and bring my lunches most days.”
2. Experiment with staffing levels. You’re excited to lead a team that will help your small business grow. But do you have really have enough work to justify all those employees? Deborah Sweeney, CEO of MyCorporation, says that experimenting with optimal staffing levels eliminated expenses and helped her form a truly productive team that shares excitement for her business.
“When we had too many employees, the work being done was not completed at its full potential, and people didn’t feel necessarily useful or challenged. Ultimately, that showed in their work. When you find the perfect number of employees — meaning no one is overwhelmed [with too much work] or underwhelmed with not enough work — your team will really shine.”
3. Examine the little costs that add up. Alona Banai, director of operations at CMI, says that — after joining the company two and a half years ago — she eliminated major expenses by taking advantage of the monthly profit-and-loss report that the company’s bookkeeper generated with QuickBooks.
“We were spending $520 a month on our phone system, $20 a week on daily UPS pickups, $60 a month on SEO reports, and $20 a month on checking account fees — just to name a few expenses,” Banai says. “By making small adjustments to our processes and shopping for more competitive pricing with vendors, we saved nearly $6,000 a year.”
4. Be strategic with your marketing dollars. You don’t have to be a marketing guru to spend your ad dollars wisely. Bryan Wetzel, chief operating officer of children’s online education provider Skubes, says he is fanatical about sub-categorizing his marketing and advertising expenses (by print ads, radio, TV, and web banners and links) in QuickBooks. By comparing each sub-category every quarter, he’s gained a clearer picture of where his best customers come from and shaved advertising costs by about 10 percent — even though he’s placing more ads, and getting a higher response rate.
“Big-ticket advertising may seem like the best route because it does, in fact, put you before a larger audience. But it’s less targeted,” Wetzel says. “We found that in our business … a $6,000 billboard isn’t any more effective than a $150 banner hanging at a Little League baseball field.”
Similarly, Andy Price, owner of 1000tshirts.co, reduced his marketing expenses by setting up a short customer questionnaire as part of his website’s checkout process. “I found out that 80 percent of my customers came from Google ads, radio ads, and Facebook, and that the majority of my revenue came from people between 15 and 25 years old, which accounted for roughly for 25 percent of my customer base.”
Armed with his survey findings, Price says he created better targeted ad campaigns, gained efficiency (with fewer advertisement campaigns to manage), and saved $9,000 a year.