Costs are an ongoing issue for any business, but the entrepreneur feels the pain of costs more keenly due to the nature of being a small business. Profit margins are slimmer, profits themselves aren’t that high, and cost cutting measures can be difficult to find. Or are they? A little thinking outside the box helps to increase cash flow without making the business suffer.
Following are some tips to help an entrepreneur save big without having to go to extremes:
1. Cut Shipping Costs.
Shaving a few cents here and there off shipping costs does add up quickly. It’s especially noticeable when there’s a high volume of packages shipped out on a regular basis.
Start by evaluating your entire shipping operation. Are you using the strongest and lightest boxes possible? Is the material you’re using for packing adding too much weight? Is the packing tape too thick? Sometimes the tape you use can add an extra ounce to the weight and push the box into the next price category.
Revamping how you pack and seal your packages by using less tape and lighter packing materials helps you save money. Buying everything in bulk keeps you stocked with materials for a long time while also reducing your costs. It’s a project that’s worthy of your attention.
2. Rent Equipment Instead of Buying.
Owning equipment has an advantage in that you can depreciate their value on your tax return, but you also have carrying costs. Maintenance, repairs, and fuel all add up. When you don’t need to own, rent. You get to benefit from the function of the equipment without having to deal with the costs. And when the time comes to upgrade, you return the item to the company you rented it from and get a newer model. You’ll still have to fuel the equipment and perform regular maintenance to keep it in operating condition, but you don’t have to deal with the other aspects of owning it outright.
3. Ask for Payment Discounts From Your Suppliers.
Many suppliers offer a discount if you pay by a certain date. Pay attention to invoices that say something like “1%/10 net 30.” The supplier is offering a 1 percent discount if you pay within ten days, or payable in full by 30 days. If you don’t see something like this on an invoice, it never hurts to ask. A supplier may prefer to offer the discount on a case-by-case basis and not offer the terms outright.
When it’s possible, take advantage of the discount. Waiting 30 days to pay a bill may give you some room, but if you have the money now, eliminate the debt at a slightly reduced amount. Any discount is better than none, and that debt won’t be sitting around, waiting for repayment.
These are some of the ways you can save money for your small business. Some are standard practices that every business uses, but if you’re a new to the game, you benefit by learning them fast. Saving money now enables you to benefit later.