Profit = revenue - cost.
This formula is gospel in the business world, and companies are constantly striving for ways to do their work more efficiently. Finding ways to reduce business expenses will not only add more to your bottom line, but you can also use those resources to optimize elsewhere and enjoy even more returns as you invest in yourself.
While making a budget and sticking to it may seem like a no-brainer, plenty of businesses go belly-up for failing to adhere to the limits they set for themselves. It can be easy to lose sight of logistics when things get busy, and that's why the follow-through is just as important as the plan.
Keep reading for simple ways business owners can save money on business costs while also streamlining the way they work.
Plan your Expenses
The first step for business owners looking to cut costs is to thoroughly review all expenses, including labor costs, production costs, and office space. Once you have an idea of your expenses — the ones you can reduce and the ones you’ll retain — create a detailed budget for the next month, quarter, or year.
When planning your expenses, consider any anticipated price changes to existing costs. For example, will the rent on your office space go up, or do you plan to increase the full-time employees on your payroll? Knowing where costs will rise in the near future helps you plan to reduce company spending in other areas.
Business owners will always encounter unforeseen costs, and there’s nothing you can do to prevent that entirely. Still, you can do your best to forecast expenses, take advantage of seasonal deals, compare your costs to other companies in your industry, buy resources in advance for a discount, and research the market when hiring new vendors. These efforts can keep you informed and help you reduce costs for your firm.
Adopt Efficient Tools and Technology
Automation is a major help in cutting costs in business. When you adopt new technology that enables your team to work more efficiently, you’ll reduce spending and improve productivity. A decade or so ago, companies had to invest a lot upfront to introduce in-house hardware that might not scale with you as your firm grows. Now, there are so many effective options for cloud-based software that can help you with HR, accounting, IT, enterprise resource planning, customer relationship management, and more.
These digital platforms allow you to go paperless, reducing waste and demanding less physical space. In the age of more employees working remotely and companies leasing out their commercial real estate, digital records are easier to track and share among distributed teams, not to mention more secure than physical documentation.
Consider this: 7.5% of all paper documents get lost. While this is no big deal in many cases, think of the situations where this could cause major stress and complications for your company. It’s not worth the risk. With digital document storage, you can always trace a file and know it's safely encrypted.
Aside from security and shareability, cloud software is cost-efficient since you don't have to build your own solution from scratch or pay for maintenance, and support is built-in. It also lets you get more done in less time by automating administrative work like creating reports, sending invoices, logging client site visits, and approving expenses.
Track your Business Expenses
One of the more underrated, easy ways to cut costs in business is to simply start tracking them. Once you have a clear understanding of where your money goes, you’ll quickly be able to spot cost-saving opportunities. Time and expense tracking software is an accessible yet precise way to keep track of every single expense your firm incurs, from payroll to employee travel costs.
Using software with budget management features will help you monitor the status of your expenses against your planned budget, keeping you accountable and on track. For cash flow coming in, automatic billing software lets you set up recurring invoices, saving time and money while keeping payments reliably on schedule.
If you’re trying to capture all billable hours to invoice your clients, time and expense software does this automatically and provides you with data you can use to optimize the way your team works. When you know the time spent on tasks, you can plan better for future projects, too, allocating the exact resources you'll need for similar work and even better results.
Negotiate with Vendors and Suppliers
Making early payments to vendors can earn you meaningful discounts over time. Assuming it won’t hurt your cash flow and your service agreement doesn’t forbid it, feel out if your firm’s vendors are willing to reduce your invoice total by a percentage for early payoff. You may also convince them to offer you a discount when you sign up for automatic billing.
Don’t be afraid to let your vendor contacts know that you’re price shopping. There’s nothing wrong with reaching out to other options to compare quotes and determine the best available price. Your provider may be willing to offer you a deal if it means you’ll continue the relationship.
Try BQE Solutions to Reduce Business Expenses
One of the easy ways to cut costs in business is to use a platform that consolidates several functions for your firm. BQE CORE’s all-in-one dashboard combines project management software, expense reporting, automatic billing, and much more. CORE was built specifically for business owners in AE and professional services industries, allowing you to run your firm more efficiently and with greater insight.
For additional tips on improving efficiency, cutting business expenses, and increasing profitability, check out the rest of the BQE blog. To try out software that helps you see your business performance in real-time and identify improvements quickly, sign up for your free CORE demo today.
