(Newswire.net — June 15, 2020) — For businesses that want to compete in today’s economy, cutting expenses is one of the best places to start. But knowing where to save money isn’t always easy or obvious. If you want to see results, you have to dig in and get to work.
6 Tactics to Save Money
Increasing revenue is always a good thing. But when it comes to boosting profitability, it’s not the only way to move the needle. You can also slash expenses.
Here are a few favorite tactics that small businesses can use to make serious headway:
1. Conduct a Waste Audit
Savings are often uncovered in the most unlikely of places. And sometimes the best way to find out where they’re hiding is to conduct an audit.
Believe it or not, auditing waste and recycling expenses can produce some rather significant savings for certain businesses (especially for companies that produce a lot of medical waste and/or recyclable materials). Companies like P3 Cost Analysts specialize in reviewing invoices, scrutinizing costs, and providing recommendations for savings.
2. Join a GPO
Profit margins can really increase once you reach economies of scale. But the problem for many small businesses is that they’re nowhere close to reaching the levels they need to achieve in order to drive costs down to reasonable levels. And this is where a group purchasing organization (GPO) steps in to fill the void.
A GPO is basically an organized group of businesses who are typically in the same vertical (or share similar needs). These businesses pool their resources together and enter into agreements with vendors to buy certain products and services at lower prices (because of the buying power).
“Group purchasing organizations allow you to save money on products you’re already buying,” Windfall explains. “Many times, they work with companies that you already buy from. This means that you get the same products you already love but for a fraction of the price. More savings means more money in your pocket.”
In many cases, GPOs are free to join. They’re often funded by administrative fees that suppliers are asked to pay in order to sell their products and services to members.
3. Renegotiate With Suppliers
Just because you’ve been paying your vendors a certain amount for the past few months or years, doesn’t mean this figure is set in stone. In fact, the longer you’ve had a relationship with a supplier, the more leverage you typically have. (Nobody wants to lose a long-term contract.)
Determine what you believe to be a fair price and start negotiating. The worst thing that can happen is they say no. It’s much more likely that they’ll meet you somewhere in the middle in order to keep you.
4. Hire a Better CPA
When you’re small and every dollar counts, the last thing you want to spend money on is a CPA. However, hiring the right CPA can mean the difference between losing money and turning a profit. A skilled CPA will provide a positive return on investment for every dollar spent.
You want a CPA who is aggressive but plays within the rules. You need someone who is constantly improving and studying new laws and methods. If your CPA doesn’t propose new ideas on a regular basis, then you might have the wrong person.
5. Use 1099 Contractors
As an employer, you can save up to 30 percent by hiring an independent contractor instead of a full-time employee. That’s because you avoid payroll taxes, workers’ compensation and disability insurance, unemployment insurance, pension, sick days, health insurance, vacation time, etc.
Another benefit of using 1099 contractors is that you only pay for what you get. If you’re slammed one month and need lots of help, the contractor gets compensated accordingly. But if you no longer need their assistance the next month, you don’t have to pay a dime. An employee, on the other hand, gets paid the same regardless of how much value they’re adding.
6. Implement Scalable Software
Be certain you’re setting your business up to grow in a highly efficient manner. One of the best ways to do this is to implement scalable software that evolves with your business as it expands. This saves money and avoids the productivity losses that usually stem from sudden changes in technology.
Boost Your Biz
Cutting expenses shouldn’t mean reducing quality or diminishing customer service. It’s all about being intentional with your spending so that you can stretch every dollar just a little bit further. No single tactic will revolutionize your business, but all of these tiny improvements will compound for some serious gains. Are you willing to give it a shot?