Did you know that approximately 31.7 million small businesses are found in the United States? Sadly, a good percentage of these businesses are struggling right now.
Whether recovering from the COVID-19 pandemic or bracing for an incoming recession, many owners are hanging on by a thread. These setbacks are causing many businesses to explore new ways to reduce operating expenses.
If you fall in this category, then you’re in the right place. In this guide, we’ll be exploring some of the ways that business owners can reduce expenses.
That way, you can weather the current storm you’re in and emerge safely on the other side. Let’s get started!
Use Technology for Automation
These days automation isn’t just for large corporations. Many small businesses can also benefit from automating various aspects of their business.
Specifically, automation can help you streamline day-to-day operations and reduce operating costs related to labor. What areas should you consider automating? These days software makes it easy to automate things like:
- Website hosting
- Supply chain processes
- Marketing communications
Keep aspects of your business that require high skills in human hands. But, don’t be afraid to automate the things that you find yourself spending excessive amounts of busy time on.
Doing so can give you the needed free time to devote to other areas of your business.
Hire a Professional Bookkeeper
At the end of the day, it doesn’t matter how much money your sales are bringing in. If you’re not tracking how and where that money is being spent, then it can lead to serious mistakes.
This can include things overspending, cash flow bottlenecks, and overpaying on your taxes. Unfortunately, bookkeeping takes a lot of time and knowledge to do correctly.
So, if you try to take this role on yourself it can take your energy away from managing and bringing in new sales. Instead, consider hiring a professional bookkeeping service like Bennett Financials.
We look at your bank balance periodically to get a sense of your financial help. Then, we implement personalized profit plans that help you flesh out and achieve your goals.
This form of financial planning gives you the ability to focus on running your business without having to worry about whether or not your money is working for you.
Outsource Certain Roles
Having full-time employees on your payroll for certain positions is a sure-fire way to drain your operating costs. So, one thing you can consider doing is outsourcing some of these roles to third-party companies or freelancers.
Ultimately, whether or not you should outsource a certain role depends on how much your business relies on it. However, it’s worth considering outsourcing the following areas:
- IT support
- Tax preparation
- Marketing operations
- Customer support
Outsourcing to these areas is a great way to keep your business as slim as possible without giving up some essential roles.
Consider Getting Rid of Your Office Space
During the COVID-19 pandemic, many businesses found out that their office spaces weren’t necessarily essential for their operations. This is thanks to huge advances in telecommunication, as well as popular applications like Google Drive and Basecamp.
Not every business is made for this. Many restaurants need to maintain a physical location. However, if your office space isn’t essential, then you might want to consider downsizing or getting rid of it altogether.
By not paying rent on the commercial property while maintaining a remote workforce you can save a ton of money.
Look for Money-Wasting Practices
It’s time to look for areas in your business expenses that are needlessly wasted.
For example, let’s say you run a taco restaurant. If you’re throwing out meat at the end of every workday, then it’s time to readjust your cooking process to minimize waste.
Not sure where you’re wasting money? Ask your employees. Odds are they have some recommendations since they’re on the front lines of operations every day.
In some cases, you might even want to provide an incentive for money-saving suggestions. If it ends up saving you thousands of dollars, then it’s worth it.
Avoid Overpaying Your Taxes
Did you know that you’re likely overpaying your taxes? When you’re trying to stay afloat every dollar saved can make a difference. That’s why deductions are so important.
Unfortunately, if you’re relying on your tax preparer to find these deductions, then you’re likely missing out on a lot of them. The goal of these professionals is to make sure that you file everything on time and remain legally compliant doing so.
Instead, consider going with a strategic tax planning service. We do an in-depth analysis of your business to help make sure that you keep any hard-earned cash you make in a completely legal way.
Prepare for Recessions
These days it seems like no one can agree on whether or not the United States is in an official recession. However, one thing is certain: rising costs are making operating expenses higher than they have been in over a decade.
Because of this, it’s time to prepare for the inevitable hardships that are ahead. This includes things like:
- Create an emergency fund for your business
- Prioritize paying off any debt you have
- Extend your line of credit
- Locate inefficiencies in your business
- Diversify your portfolio
Bennett Financials can help you stay on top of all of these areas by creating a financial plan for your specific needs. That way, you aren’t caught off guard when the economy inevitably dips.
Need Help Reducing Your Operating Expenses? Contact Bennett Financials
We hope this guide helped you learn how to reduce the operating expenses for your business. If you’ve tried everything to reduce these costs to no success, then it’s time to contact Bennett Financials.
We help businesses transition away from the ‘profit-at-all-costs’ model that ends up tanking many establishments. Instead, we help you discover a cash flow mindset that’s much better for sustainability in the long run.
So, if you’re ready to reduce your operating expenses once and for all, then get in touch with us today.