5 ways to cut business expenses
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If your financial fitness could use improvement, here are ways to cut costs and boost the bottom line.
January always brings a renewed focus on fitness, but what about the financial health of your business? Are there expenses that could be trimmed for a more robust bottom line? Here are five ways to cut business expenses.
Re-evaluate your space needs
With employees working remotely all or most of the time, it could be time to downsize your office space. Re-evaluate how much space is really needed for daily operations and the times when teams work on site.
If you sell products, is it time to adjust your space allocation? If you have a storefront and much of your sales have shifted online, is it time to reduce retail space and increase storeroom or warehouse space?
And, if you have space no longer in use, can you lease it to another business?
Review recurring expenses
An annual review of recurring expenses can save big money. Might another insurer offer the coverage you need for less? What if you bundle services with a single provider? Is your cellular bill costing more than planned because of data overages? You won’t know unless you check it out.
Don’t feel like you have to tackle everything at once. Schedule reviews of recurring expenses throughout the year. Look at renewals one to three months before contracts expire; this gives you enough time to negotiate better rates or shop for a better provider.
Reduce energy costs
Cut energy costs by reducing energy use. Steps to take include installing a programmable thermostat, changing HVAC filters regularly, using energy-efficient light bulbs, taking advantage of natural light, and turning off computers and lights when not in use.
Also, contact your utility company or a local contractor about an energy audit to identify more ways to trim electric and gas bills.
Pay early to get discounts
Suppliers like to get their money quickly, and in some industries, it’s common to offer discounts for fast payments. For example, a supplier may have terms like 2/10, net 30. This means the supplier is offering a 2% discount if you pay within 10 days. If you miss the 10-day window, the full invoice amount is due in 30 days. Taking advantage of even a 1% discount for paying suppliers quickly means more money in your bank account.
Buy used equipment
Used office furniture and equipment, store fixtures, and heavy equipment will always cost less than new. Many businesses look for previously leased equipment that’s a few years old and still has a long service life remaining. Even though they don’t get all the latest features, the equipment does everything they need and provides substantial savings.
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