The new year is a great time to ensure the health of your small business for the next 12 months. It’s that time of year when everyone considers cutting back—whether you’re eliminating calories or costs, austerity is what comes to mind during winter. If you can trim the fat early, you can focus on more pressing issues as the year gets underway. Chances are that you slipped into some bad habits in 2015 that you’d prefer not to carry forward into the new year. Your willpower is strongest now, take advantage of it to help tighten your belt a couple notches.
5 Tips to Trim the Fat in Your Small Business
Debt is costing your business a pretty penny. Evaluate what kinds of debt you have and how much of your revenue could reasonably be put toward driving it down. Take time to renegotiate loans with rates above the market rate.
Comb the budget
Sometimes expenses creep into your budget and remain on your balance sheet longer than you expected. Subscriptions and food services are the easiest to cut. Does your company have a cable TV subscription? Try cutting the cord and watching online content.
Unless it’s absolutely necessary, steer clear of eliminating small perks like coffee and office snacks. It’s one of the first things your staff will notice and will alert them that something might be wrong with the company, even if that’s not the case.
Talk rates with vendors and landlords
How long has it been since you’ve talked to your vendors about pricing? You can probably drive down some costs if just ask. Are you a valued client to a major vendor? See if they could lower your bill in exchange for a contract extension. How much are you paying for your lease? It can cost a property owner a lot of time and money to find a new tenant, so they may be willing to slash your bill a bit to entice you to stay put.
Make sure you do your research on rates and don’t ask a vendor to cut prices too low. You could ruin a good relationship and find yourself looking for a new vendor.
This is probably the last area that a small business wants to reevaluate, but it needs to be addressed from time to time. While the majority of your staff are likely good hires, holding on to poor performers can cost your company money. Assess the value each staffer provides and consider if a position needs to be reassigned, combined or eliminated. Realize that these cuts will cause the most concern among staffers and you may see unintended consequences, such as staff departures or low morale.
Avoid month-to-month purchases
You can see significant savings if you buy in bulk. Whether it be copy paper or software subscriptions, you can get a large discount if you pay costs quarterly or annually. If your supplier isn’t pushing bulk orders, just ask. It’s likely that they can make arrangements.
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