How Your Small Business Can Keep Costs Low

The idea that money can be tight when you’re starting a business is one that can gets a lot of attention. There is a great deal of talk about how entrepreneurs can save money, how to raise funds for a startup, and even how to redirect the earliest profits back into a startup. These are all important ideas to focus on, and often a diligent approach to funding can be the difference between a business “starting up” or failing in the first place.
What we don’t talk about quite as often, though, is how small businesses can continue to keep costs low once they’re established. Even if you get a company up and running and profiting consistently, you’ll want to cut costs where you can. And we just so happen to have a few ideas for how you can do so….

Outsource Some Tasks

Particularly if you’re new to running a business, outsourcing jobs can seem like an added cost. You aren’t necessarily used to paying for work, and paying for more work outside of your actual company may — somewhat logically — seem burdensome. The general idea, though, is to do outsourcing where you might otherwise have to spend even more, either in the form of time and internal resources, or capital to hire a new employee or department. Ideally, the benefits of outsourcing for a small business should include reducing labor costs and allowing fo more capital directed to other areas. And as a bonus, it may even help you to get certain jobs done more quickly than you otherwise would — if, say, you’re outsourcing a job that no one in the company has the expertise to take on quickly.

Form an LLC

Establishing a small business as an LLC is looked at by some as little more than a formality, or something done for symbolic reasons. There actually can be some symbolic benefit, in that stamping your company with “LLC” will lead some potential customers to take it more seriously. But more to the point, the benefits to setting up an LLC actually include some changes with respect to taxes. Most significant is that an owner of an LLC avoids “double taxation” — an all-too-common practice by which some business owners are taxed for earnings at both the business and individual level. The more profits you’re generating with your business, the more this simple change may save you as compared to other business structures.

Embrace Working From Home

The idea of embracing work-from-home practices is naturally a very popular one right now because of the pandemic. Many small businesses have had not choice but to take this step. But if you haven’t switched to working from home yet, or you plan to return to an office in 2021, you may want to consider the idea from a financial perspective. Small businesses pay a collective fortune in rent, to the point that landlords’ impact on small businesses is now being looked at as wholly decisive: Landlords who offer a break will enable some small businesses to survive, and those that don’t may effectively kill those businesses off. This is a situation that has arisen due to the pandemic, but it also sheds light on just how much companies are spending to house themselves. Considering this, it’s reasonable to re-evaluate. If your small business doesn’t truly need a brick-and-mortar space, you may save considerably by switching to work-from-home.

Cut Back on Excess Expenses

The notion of cutting back on excess expenses is really what we’re talking about more broadly in the first place. But if you really focus on the idea, instead of treating it as generic advice, it can lead you to cut a lot of costs from your small business. Start asking yourself questions about the services and products you use, and you may just be surprised at whee you can save. For instance, are you subscribed to services (such as communications platforms) you’re barely using? Have you purchased supplies that have never been implemented? Are you spending on marketing efforts that aren’t producing results? Asking and answering these types of questions can lead to significant, sustainable savings.

All of these ideas can help you to keep your small business’s costs as low as possible, even once you’re past the startup phase and generating income. There’s never a bad time to focus on savings, and ultimately an effort like this will help your business to become as strong as it can possibly be.

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