Success Advice
The Cost of Business: 4 Overlooked Strategies for Reducing Expenses
Most businesses focus on growing revenue, but cutting back on expenses can also be an effective strategy for boosting the bottom line. Saving thousands each year is the same as adding thousands from an accounting perspective.
Many businesses are fearful of cutting costs because they believe that it might lower the quality of their products/services. And that’s a fair fear, because if it’s not managed correctly, then that can happen. But there are also plenty of ways for businesses to reduce their outgoings while preserving — or even enhancing — their performance.
In this post, we’ll run through a few often-overlooked strategies for lowering your expenses.
Rethink Your Working Space
Renting a private space may give your business a professional look and feel, but it could also be accounting for a significant chunk of your budget, in some cases as much as 15%.
One smart way to maintain a private office space while also saving money is to look at alternative workspace options, such as a co-working space. They can provide the professional space you need to get things done at a fraction of the cost of renting your own space. You’ll also be able to rub shoulders with other businesses, which can be a great source of motivation and productivity.
Lower Your Tax Bill
Paying tax is unavoidable, but how much tax you pay is often more within your control than many business owners believe. With smart tax planning, you could save thousands in tax each year. Mostly, these savings will come from being aware of the legal pathways to reducing your tax bill. For instance, knowing how to register for VAT or how to claim tax relief on the depreciation of assets. For complex cases, it could be worthwhile working with a tax consultant, but most businesses will find that they can significantly lower their tax bill themselves with minimal paperwork.
Get Smart About Equipment
Equipment costs can be a big expense, and are often viewed as an unavoidable expense at that. After all, you simply need that equipment in order for your business to work at full capacity. With that said, there can often be ways to get the equipment you need without committing your working capital to get it. In some cases, it can make sense to buy second-hand (or refurbished) equipment rather than new. That’ll deliver the same performance, at 40 – 60% of the cost of buying new. For more expensive machinery, it nearly always makes more sense to lease the equipment rather than buy it outright.
Audit Your Expenses
Auditing your expenses from time to time — say, every six months or so — can help to prevent the accumulation of costs. Many businesses sign up for software or other subscriptions, and continue paying for them even when they’re no longer needed or when a cheaper option becomes available. There’ll be instances when you simply have to continue with an expense, but it’s always better to test those necessities rather than to blindly continue paying for years.
