To call the last few weeks a shocking turn of events would be the understatement of the century. We went from having a booming economy that was as healthy as any in American history to a sudden and massive recession caused by a dangerous and deadly disease. For small business owners like yourself, figuring out how to navigate these treacherous times is key to survival.
Try These 7 Cost-Cutting Tactics
Small businesses are getting hit the hardest right now. There are few protections in place to safeguard against lost sales, suppressed revenue, and business closures. But if there’s one thing you can do, it’s cut costs.
Here are some simple yet powerful cost-cutting tactics you can use to keep your business treading water until the marketplace rebounds.
1. Join a GPO
When you’re a small business owner, you don’t always have access to the lowest priced goods and services. But there’s no need to order larger quantities than you need just to bring the price per unit down. The better option is to
join a group purchasing organization (GPO).
A GPO is basically a membership group that consists of businesses that are interested in buying similar products and services. These groups are highly attractive to vendors and, as a result, they offer competitive pricing to members of the group. By joining a GPO, you can significantly lower the cost of goods and services that you’re already buying.
2. Barter With Other Businesses
Bartering isn’t a huge part of the American business economy, but who says you can’t utilize tradeoffs to keep your expenses low?
Let’s say, for example, that you run a digital marketing company and you need accounting services. You could offer a local accountant free marketing services in return for bookkeeping help. You both get something you need without having to pay for the service. Not every business will be open to bartering, but there’s nothing wrong with making an offer!
3. Switch Banks
A bank is supposed to keep your money safe so that you have access to it when you need it. Yet many banks charge hefty maintenance fees for the pleasure of using your money. Thankfully there are some banks that have eliminated superfluous fees and offer better than average interest rates. Now’s a good time to shop around and consider switching banks.
4. Purge Recurring Services
In the world of SaaS and subscription services, it’s common for small businesses to spend hundreds or thousands of dollars a month on recurring services. Sometimes these services are essential, while other times they’re considered luxuries. When finances get tight, these auxiliary services should be the first to go.
5. Encourage Remote Working
The vast majority of businesses have already moved to remote working setups in the midst of this public health crisis. But if you haven’t already, consider initiating the shift. Doing so will cut down on utility costs and energy expenditures. This could save you hundreds of dollars per month.
6. Outsource Non-Essential Tasks
There may come a time when you need to let some employees go and/or lay off certain workers. This should be considered whenever the role is non-essential and the responsibilities
can be outsourced.
If you’re willing to go through the trouble of finding a good contractor or service partner, you’ll find that dozens of tasks can be outsourced at a fraction of the cost. This includes accounting, marketing, customer service, IT management, and human resources.
The great thing about outsourcing is that you only have to pay for what you need. This makes it both scalable and cost-effective.
7. Pay Invoices Early
There’s tremendous value in paying invoices early. Many vendors offer small discounts, which can add up over time.
For example, it’s common for certain vendors to offer “
2/10 net 30” terms. This means the vendor will knock off 2 percent of the invoice total if you pay in full within 10 days, as opposed to the standard 30 days. Not bad!
Putting it All Together
You might not need to implement all of these cutting tactics, but it’s helpful to know that they exist. Pick and choose the ones that you believe will help you the most. Study their impact and look for ways to practice even greater spending discipline in the weeks and months ahead.