Cutting costs isn’t always easy. And when you’re trying to operate a small business, it can be even harder. But when you can pull up your online bank statement and see a number other than straight zeros on the screen, the comfort that gives you and the amount of anxiety it reduces is more than worth the things that you may have to give up or change in order to get to that point.
Perhaps most importantly, cutting costs actually makes retirement and life enjoyment activities a real option. And when you can see that the fruits of your labor are paying off and that you and your family are going to be okay financially, there’s no greater feeling in the world. So, what can you do to cut business costs, increase your savings, and ultimately feel more secure?
Of course, you first instinct may be to lower utility usage, cut back on staff and/or their benefits, reduce your inventory and supplies, and all of the other common ways to save a penny here and a penny there in the corporate world. However, there are other just as effective options to consider when it comes to finding a way to lower your expenses and also get more money coming in, thus building up your bank accounts to healthier levels.
Be Charitable
When you involve your small business in charities, whether by donating time, money, or via sponsorship, a lot of positive money-based things happen. First, you get good press for free or almost free, depending on what and how much you donated, which means that you can potentially increase your revenues without spending any real money on advertising. This also means that more people (read: more prospective clients) are going to know who you are simply because you got involved.
Additionally, people like doing business with companies that share the same passions as them. Therefore, individuals who are involved with the particular charity that you choose to support will be more likely to use your products and services. They will feel like they have a greater connection to you, thus compelling their loyalty to your company long after the event has passed.
As indicated in the Harvard Business Review, being charitable also gives you a competitive advantage. That means that you can likely gain over your closest business rivals solely by supporting a good cause.
If this sounds like a good option to you, you might want to check out the Federal Trade Commission’s Consumer Information guide of what you need to know before giving to a charity. This will help you pick out one that isn’t a scam and will put your money to good use. It even has a charity checklist so that you can ensure the one you select is reputable.
Barter for Your Needs
Although bartering was somewhat of an everyday act in times long ago, we’ve become a society that tends to rely on cash or credit payment for everything. We just look at the price tag, write the check or swipe the card, and whatever we want is suddenly ours. So, if we don’t have the money or credit to cover something, we simply don’t get it.
By bringing bartering back and utilizing it more often though, you may be able to swap your products or services to help you get what you need without having to exchange actual cash and dwindle down your savings account. For instance, if you own a catering service but need marketing work, why not contact a local marketing agency and offer to cater their next event in exchange for a web design or social media plan? Exchanging goods and services quickly becomes a win/win situation for both of you.
Support Your Local Suppliers
Sandy Czaczkowski of the North Branch Bakery knows how to utilize this strategy all too well. Of course, running a successful bakery means that Sandy needs to make sure she always has the necessary supplies on hand in order to create her world-renowned goodies (seriously…people in the U.K. know about and long for her baked goods made in a tiny town in Michigan). However, instead of just ordering them through a larger company and paying standard prices, she decided to contact a local supplier and today gets some of her products at discounted prices while also supporting local business at the same time.
By supporting other business people in your own community, it has the same positive effects as donating to charities. You establish good relationships with those who are likely to buy your products and services, and you get to help grow your community in a more direct way.
Reward Referrals
Depending on what line of business you are in, your customer acquisition costs could range anywhere from pennies to hundreds of dollars per person. One way to reduce that rate, whatever it is for you, is to reward your customers when they make a referral to their family and friends. This can be by doing something as simple as sending a handwritten thank you card or by extending an expression of thanks that has cash value, like a gift card good toward their next purchase with you.
Either way, you’ll make your loyal customers even more loyal and new customers will be happier to refer their loved ones to you knowing that you notice and appreciate what they’ve done. This strengthens your customer base in a lower cost way while getting higher quality referrals directly from your target market.
Do these four things and you can effectively cut your small business costs while potentially raising your revenues at the same time. Does it really get better than that?
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