Two of the main culprits of small business failures are financial mismanagement and cash flow issues. So, it isn’t surprising that reducing expenses and overhead costs is high on the list of concerns for business owners.
However, with the right strategies, you don’t have to feel overwhelmed by the cost of running a business! The tips below can help you gain more control over your business and achieve financial stability while working towards your growth goals.
Know Your Deductibles and Tax Write-Offs
Depending on the type of business you are running, between 21% and 37% of your income will go to taxes. While this is an essential expense that you’ll have to factor in, it is important to understand what part of your income is, in fact, taxable.
Before filing your taxes, make sure to review the tax deduction guidelines published by the IRS, and look into the lesser-known tax write-offs small businesses can take advantage of. For example, did you know that capital expenses (such as startup costs), business property rent, and business-related travel costs are deductible?
Just make sure to double-check what tax write-offs apply to your specific business structure and record all of your expenses.
Outsource Non-Core Aspects of Your Business
Hiring and maintaining a full in-house team can represent a significant cost for any business, no matter whether you are running an online startup or a brick-and-mortar shop. At the same time, the talents in your team represent the backbone of your organization and can make a difference in your chances of success.
Striking a balance between surrounding yourself with top talents and saving on unnecessary costs isn’t always a straightforward process, but outsourcing can make things easy. After all, some of the benefits of outsourcing include cost-efficiency, flexibility, and scalability.
Take Advantage of Technology
While not all new technologies are necessary or useful to your business, some new systems and software are essential to hone your competitive edge. For example, customer relationship management software, inventory management systems, and cloud computing are all critical systems you will need in your business.
These technologies can help you save money through automation, craft more accurate cost and profit projections, and record historical data. Even more importantly, business management technologies can highlight in what areas of your business you need to invest and which are hemorrhaging money!
Look for Large Items of Equipment at an Auction
Whether you are just establishing your headquarters or are in the process of upgrading your office space, you are likely to face significant expenses related to equipment, furniture, and decor.
However, luckily, you won’t need to absorb the entire cost of furnishing or equipping your commercial space! For example, looking for surplus equipment in auctions or investing in second-hand items released by failing or moving businesses can help you save a significant amount of money – which you can now invest in scaling up your business!
Create a Long-Term Budget and Track Expenses
Not having a defined budget in place for your monthly expenses can cause you to feel overwhelmed and out of control. And, when you find yourself in this situation, you are likely to start experiencing cash flow issues within weeks!
That is why crafting a budget and sticking to it should be a top priority for any business owner. Using historical data, tracking every expense, and keeping on top of regular outgoings can help you better understand (and manage) the costs of running your business.
Cut Back on Unnecessary Overhead Costs
As rent, utilities, and property prices continue to increase, you might find yourself struggling to keep up with large overhead costs. However, multiple strategies can help you reduce your monthly and yearly outgoings, including:
- Consider downsizing or moving into more affordable office premises
- Take advantage of hybrid work models and allow your team to work from home
- Outsource or work with freelancers and contractors
- Review the contracts that are already in place with suppliers, third-party providers, and contractors
- Implement sustainability practices that will help you cut back on the cost of single-use items, energy, and paper.
Work With a Specialized Advisor
While it might seem counterproductive at first, the best strategy to save money is to spend money – hiring an experienced financial advisor! A specialized accountant can help you craft an accurate budget, reduce expenses, and even design a tax-efficient financial strategy!