8 Ways to Reduce Small Business Spending Leaks
Transcript of 8 Ways to Reduce Small Business Spending Leaks
8 Ways to Reduce Small Business Spending Leaks
Spending leaks. Those hidden costs that, unchecked, can put a big dent in a small business owner’s budget. How do you find them, and more importantly, fix them?
It’s not always easy, but it’s definitely doable. Here we identify eight common money leaks you may be missing, and give tips on how to promptly patch them up.
NOTE: This information is only provided for general informational purposes, and should not be considered as offering individualized tax or legal advice. Tax laws and legal issues are complex; please consult your tax advisor or legal professional on specific issues related to your situation.
01. Maintain an Energy-Efficient WorksiteTip:
The less you spend to keep the lights on — literally — the more money goes in your pocket. Take advantage of a free annual energy audit and invest in making your workspace more efficient to prevent high utility charges.
According to ENERGY STAR, most companies can save
2% to 10% on energy costs annually through better energy
02. Take Advantage of All Tax Write-off OpportunitiesTip:
Business expenses are a major (and often underutilized) source of tax savings — especially for independent professionals. Monitor your business expenses carefully and study up on potential tax deductions so you aren’t leaving money on the table. For more help with taxes and deductions, check out these resources from the Staples Business Hub:
• Tax Information That Could Impact Your 2014 Small Business Return
• Tax Tips for First-Time Employers
• Get the Small Business Tax Deductions You Deserve
• Deciphering Deductions: 5 Tips to Save You Money
• The Ins & Outs of Small Business Tax Deductions
03. Measure Your Marketing Tip:
Don’t risk spending money on tactics that aren’t yielding results. Track and analyze these four marketing metrics with any number of great tools, such as Google Analytics and Facebook Insights:• Consumption: How many people are visiting your Web site?
What are they viewing?
• Sharing: Is your Web site and social media content being passed along by readers?
• Lead Generation: Is your marketing prompting a consumer action, like signing up for a newsletter or free trial?
• Sales: Did you make money and acquire new customers?
For more helpful hints on analyzing your marketing, visit the Staples Business Hub. Not sure which social media platforms are right for your small business? Click here to find out.
04. Evaluate Staff PerformanceTip:
Over time, an underperformer can cost big bucks. But sometimes repositioning employees, or working more closely with them, is the real solution for savings.
Howard Lewinter, business advisor and SUCCEED member, recommends you ask yourself
the following before terminating an employee:
• Did the staff member in question receive adequate coaching?
• How/what is the person’s relationship to the team?
• Have you properly defined the role and your expectations for it?
05. Assess Your Business StructureTip:
As your business grows, it’s important to continually assess its structure; the wrong setup may deprive you of benefits. For example:
• Sole proprietors are not afforded certain tax benefits
associated with an LLC or corporation (C Corp or S Corp).
• C Corps carry the possibility of double taxation (corporate
level and personal incomes).
For more information on legal structures, click here.
06. Price Your Products Right
If your products are priced too low, you’re leaving money on the table. And 80% to 90% of pricing mistakes skew in this direction. Time to roll up your sleeves and do the math — if your prices are off, now is the time to learn how to fix them.
Business advisor and SUCCEED member Kevin Hoult’s advice is to
maintain strong pricing, and then focus on nonmonetary bargains, such
as “warranties, delivery service after sale [or] effective branding to drive
consumer choice.” He explains, “If a business earns a 30% gross profit
margin and reduces prices 10%, it will be necessary to increase sales
25% to earn the same gross revenue.”
07. Gather Competitive BidsTip:
You may love your vendors, but your profits are your first order of business. Whether it’s supplies, companywide health insurance or outsourced services, be aware of competitive rates. Collect bids to ensure you’re paying the lowest amount.
08. Know the Difference Between “Frugal” and “Cheap”
Savings are good, but cutting corners — particularly when choosing technology — can end up backfiring and costing you more later.
According to a 2012 study by J. Gold Associates, maintaining outdated
computer notebooks (4 to 5 years) can cost roughly $960 per machine,
which is comparable to a typical replacement cost. Over the same
timeframe, outdated equipment can cost an organization $9,600 in lost
productivity, which means you’re likely to save more by replacing, rather
than repairing, outdated equipment.
Arrange for a meeting with
your CPA to take a look at your
business’s financial health. A
trained eye is more likely to
spot the leaks you’ve missed,
or suggest improvements to
avoid them entirely.
Advice InspirationActionOnce you’ve identified a
leak, address it immediately.
Proactivity will prevent leaks
from lingering or escalating.
“We cannot solve our problems
with the same level of thinking
that created them.”
– Albert Einstein
For more expert tips on how to manage your small
business finances, visit the Staples Small Business Hub.