For the business-minded, creative entrepreneurs, and self-starters of the world, owning your own business is a dream come true. Between dictating your own schedule to putting your passion into production, there are many awesome perks to enjoy as a small business owner and operator.
However, like anything worth pursuing in life, there’s two sides to this coin. While the benefits of business ownership are endless, it’s important to consider the financial costs associated with launching and maintaining a small business. In fact, an estimated 82% of small businesses fail due to cash flow issues.
From startup costs and restocking inventory to keeping the office lights on and payroll paid, there are infinite expenses associated with business operations. The good news is, there are several things you can do to offset your expenses by saving elsewhere and minimizing the expenses that you’re definitely on the hook for. Read our post to learn more!
1. Minimize internal expenses
Whether you’re budgeting for your personal finances or your business, one of the first crucial steps to take is reviewing your current monthly expenses. If you haven’t examined your expenses recently, or ever, chances are you’ll find some extra items that you no longer need to be paying for as well as some you can cut back on.
Make it a habit to review your internal expenses on a quarterly basis and check things like inventory costs and needs, insurance policies, unneeded subscriptions, and employee expenses.
2. Outsource as necessary
Your employees are the wheels that keep your business moving forward, but it’s no secret that hourly and salary wages can really add up. When you’re experiencing a high-volume period, it’s a natural reaction to want to hire a set of helping hands right away but some business experts recommend looking at your other options before making an immediate hiring decision.
Hiring independent contractors on an as-needed basis can provide a great way for business owners to save money on payroll, employment taxes, and other employee-related expenses. What’s more, if you find the right contractors, you can create strong professional relationships and continue to work with them on a regular basis, much like an employee, but more cost-effective for your organization.
3. Leverage small business tax breaks
Tax season can be a dreadful time for individual taxpayers and small business owners alike. However, if you’re smart about how you file, you may be able to catch a bigger break than you might have expected. In fact, there are several small business deductions and credits small business owners can claim on their return with the appropriate details and forms to back up their claim.
Form 8949 is one example where you could save if you lost capital on an investment over a given tax year. While losing out on any investment is unfortunate, it’s worth knowing that the IRS is willing to give you a break if you meet their criteria.
Small business taxes can become really complicated really quickly, so it may be worth considering hiring professional help. Professional tax preparers are well-versed on tax code and will be able to identify the credits and deductions that offer you the most value.
4. Perfect your negotiating skills
Whether you run a product or service-based business, chances are you’re working with other vendors on a regular basis, many of them small businesses themselves. If you do regular business with a certain vendor, it can be a worthwhile idea to try and negotiate costs with them. Keep in mind, you may need to pay upfront, order in bulk, or meet other requirements in order to make a deal but it can really pay off in the long run.
5. Embrace remote work environments
Millions of Americans and people around the world have recently adapted to the work from home lifestyle amid the coronavirus lockdown, but what’s stopping you from continuing the trend after the pandemic is over? Remote work is one of the best ways businesses can slash their operational expenses by eliminating the need for a commercial lease, utility costs, commuting expenses, etc.
Many business experts are expecting remote work to be the way of the future, and it could serve your wallet well. With that said, WFH environments only really work when you manage your remote team effectively. If you plan to stick with working from home, make sure you’re checking in with staff, measuring productivity, and maintaining positive morale.
Running your own business can be incredibly costly but with these five tips, you’ll be well on your way toward greater savings and a bigger bottom line!