What are the simple cost cutting ideas that I can implement today?
This question made us put our coffee mugs back on the table. It really got everyone thinking. Did we unconsciously implement some strategy which helped us to cut expenses & save money? We started sharing our experiences and some really useful strategies started to come out of the discussion.
I’m putting together 30 cost cutting ideas that can help you beat cash flow crunch and save money in your business.
First Things First
1) Review all expenses, even the little ones.
You can’t manage something which you don’t track. If you are not keeping a record of all your expenses, you should start doing it right now. A good accounting software can help you categorise expenses and help you take measures to reduce them.
I know a company that used to order pizzas every Fridays for the team. When their accountant told them that the annual bill ran into lakhs, the owner was in a rude shock. Sometimes we unconsciously ignore small expenses that can pile up quickly over the period of time.
2) Check for unnecessary expenses
Amit Sinha, the owner of a small business consulting firm in Mumbai, finds that many small-business owners end up with expenses over time that they no longer need. He recommends reviewing your budget with a magnifying glass and making sure all of your expenses are still necessary. For example, perhaps you purchased a magazine subscription a long time ago that you no one reads.
Check all such expenses and get rid of unnecessary ones.
3) Use 80/20 principle.
Pareto’s 80/20 principle states that 80% of the outcome is caused by 20% efforts. You can apply this powerful principle to limit expenses on those 80% activities that are not generating enough income for you.
Marketing
4) Cut traditional advertising in favour of low-cost alternatives.
Traditional advertising methods like buying print or TV Ads and putting up hoardings can get very expensive these days. Explore new tools like Google AdWords & Facebook Ads to advertise your product to the targeted audience.
You can target users from a specific city, age-group and demographics and get good returns on your marketing investment.
5) Be a good neighbour.
Split advertising and promotion costs with neighbouring businesses. Jointly buy the hoarding space or take your marketing alliance further by sharing mailing lists, distribution channels and suppliers with businesses that sell complementary goods or services.
6) Create partnerships for marketing
You might have seen the TV advertisements where DTH box comes bundled with a TV. Explore opportunities to partner with non-competing companies to promote your product and save on marketing expenses.
It’s important to make sure that the partnership is mutually beneficial for both the parties otherwise it will not yield the desired results.
7) Think beyond the cash, Barter.
When that cash supply gets low, which is a common thing in case of small businesses, don’t close the door on getting what you need. Consider the age-old practice of bartering. Priya Mathur – Delhi based accountant used bartering successfully by offering her own CA services in exchange for work by an interior design firm when she needed an office redesign. As with any negotiation process, the worst answer you can get is a simple no, and you might be surprised by how quickly you’ll hear a yes.
Office Expenses
8) Look up in the cloud
You can save a lot of time and resources by adopting cloud computing. Employees can work remotely and use online collaboration tools to get the work done. For example, you can use
Dropbox to share files,
ProfitBooks for managing finances online,
WebEx or Skype to have virtual meetings.
Just find the opportunities to mobilise your work using cloud apps. This will definitely result in cost saving in a long run.
9) Go green and save the green stuff.
Going green is not only a great PR move, it’s also a smart financial move, according to Shel Horowitz, author of ‘Guerrilla Marketing Goes Green: Winning Strategies to Improve Your Profits and Your Planet’.
Horowitz recommends simple moves such as keeping equipment on a power strip and turning it off when not in use or replacing your existing printer with one that prints on both sides of the paper, thus reducing paper waste and cost.
Since the object of many environmentally friendly changes is to save energy, and you have to pay for the energy your business uses, if you can reduce energy use you will also be reducing your costs.
10) Have virtual meetings
Next time you have a meeting with your client in another city, request them for a Skype call. Using latest technology, you can save a lot on travelling expenses. We push for a Skype call even when the meetings are within the same city. I understand that a first meeting is important and should be done face-to-face but all follow-up meetings can be done virtually.
At ProfitBooks, we give product demo online using
TeamViewer when we can give our clients access to our computer screen and walk them through the application features.
11) Use open source software
You can save a substantial amount of money if you start using open source software. When ordering new Laptops for the team, you can go for the ones without Windows OS. Those are cheaper and can run open source OS such as
Ubuntu. Similarly, you can get open source office suite instead of Microsoft Office and save on licensing costs.
There are a lot of open source softwares like CRM, Document management, etc are available which are easy to use and don’t cost a penny.
12) Reduce the number of landline phones
If you are one of those businesses that still using landlines, its time to think again. There was a time when landline phone was a necessity but it’s no longer the case. Mobile phones are cheaper and offer much flexibility.
You can use cloud telephony system to route calls between mobile numbers.
13) Buy used equipment.
Save between 50-70 per cent by buying used computer equipment, copiers and office furniture from the classified sites such as
OLX or
Quikr. You can negotiate directly with the seller and get a good deal. If you are not feeling techy, turn up to local newspaper classifieds which are other good sources of used equipment.
Be a smart Entrepreneur
14) Pool Purchasing Power
Nowadays, home buyers come together and manage to get a good deal from the builder.
Find other small-business owners and collaborate with them to save money on supplies and other goods.
You can even save money while importing goods from another country. Mr. Narang is an electronics retailer in Delhi. He has partnered with 7 other vendors who jointly import stuff from China in one container. This helps them to share the cost of a container which is normally accessible to only big businesses that have a large order.
15) Always Ask for a Discount
They may not advertise it, but many top retailers will discount their items for small business owners. You just have to take the initiative to ask.
Sometimes, you can even get discounts when you pay within the credit period. All you have to do is to ask.
16) Don’t Buy in Bulk
Surprised with advice? Often, small business owners buy things like office supplies in bulk because it seems less expensive to buy that way. For instance, if you buy a 100 sets of printing paper, your cost per set will be less than if you bought them one at a time. But you have to ask yourself: How quickly you will consume 100 sets of printing paper? More likely, you’d either lose them or find that most of them torn out before you get around to using them.
As a small business owner, you could greatly reduce their expenses by buying only what you need today – not what you think you’ll need tomorrow. The focus should be to improve the cash flow.