Irrespective of the type of business one runs, chances are costs have progressively been rising year over year. Larger enterprises are able to manage these rising costs, but small businesses have difficulty absorbing these costs with limited financial resources and competitive price pressure.
Also, a new macro-economic environment in India presents its own challenges – COVID-19, reduced demand, a never-seen-before drop in quarterly GDP (Q2 2020) of -23.9%, Indian small businesses have to brace themselves for some difficult times ahead. Active cost management is one of the key ways to manage this situation efficiently.
There are several steps that you as a small business owner can take to maintain your business costs within a specified budget and limit expenses to meet financial targets. The best approach is to plan ahead and focus on being proactive when it comes to managing costs. In the long run, being proactive saves your business even more money. In many cases, it’s about making smarter choices when determining where to put your small business capital.
These are some quick solutions you can look to adopt
Use More Technology
With the right use of technology, you can save money and conduct your businesses in ways that were not possible five years ago. Some ideas to explore are: use of video conference services like Jio Meet; move to online payment services; explore open-source software and remote desktop applications, there are many ways you can reduce business costs with technology.
Make your small business go Paperless!
The cost of paper, printing ink, envelopes, etc. may seem low, but can mount up to large expenses. Moving to a digital invoicing and payment system, and managing important paperwork on computers can help save time and reduce some of the most common recurrent business expenses. Paperless systems let you quickly scan and file documents digitally, and also store digital documents with ease.
Buy Refurbished Equipment
A huge business cost is the purchase of brand new equipment at retail prices. You can reduce the expense by buying refurbished electronics, furniture, and equipment. These are often as good as the brand new range but offered by manufacturers at a discounted price.
Use a corporate credit card
Business owners can finance their business needs including working capital by using these cards. Business credit cards have extremely secure transactions. There is no risk of losing cash or the worry of carrying cash around. Employers can also track the credit card expenses of their employees. Many banks offer reward points, cash backs, discounts and deals on business credit cards.
Manage your working capital efficiently
Most small businesses have a large number of payments to deal with every month, from rent or mortgage payments through to tax, salaries, electricity bills and telephone bills. Make a note of when all your payments are due to come to make sure that you don’t miss them, and if you have direct debits or standing orders, plan them so that they are aligned to the dates that receivables are expected to hit your account. Spread out your expenses across all 12 months rather than lumping them at one go. For example, spread out your employee bonuses across quarters; take monthly healthcare plans for employees instead of annual plans.
Online marketing for small businesses
If you have still not explored Internet marketing, you are missing the possible benefits of rapid, excellent-result, low-cost marketing. You can start with a business blog, social media marketing, or other online advertising and have the potential to see a relatively fast response with very minimal business costs.
Consider an alternative place for your small business
Physical place of business is expensive and, in many cases, necessary. However, post COVID-19, If you believe that you may be able to reduce your business costs considerably by downsizing your physical location, exploring a co-working solution, or maybe adapting your business to a home-based business, it may be worth taking that decision.
Outsource nonessential functions
As a small-business owner, you can work with freelance talent by hiring contractors for part-time or short-term tasks. Also senior talent can come be appointed on a consulting basis than as a full-time employee. Outsourcing nonessential, continuing functions, such as payroll, to a third-party agency or administrative tasks to a part-time virtual assistant are also cost-cutting measures worth considering.
These small initiatives can help reduce overheads, increase efficiency, and lead to sustained financial health for small businesses.
We at Onsurity believe in improving the functionalities, expenses, and productivity of small businesses. Increasing team productivity and employee retention is vital and with our healthcare benefits plan, we’re enabling small businesses to achieve the same.