Small businesses are an essential part of a thriving economy. No matter the type of business — private practices, artists, mom-and-pop shop owners, restaurateurs — small business owners identify and fill a need inside their communities while offering employment to local workers. In fact, small businesses account for more than 47% of private-sector employees.
One reality of small business ownership is that, even when successful, there are times when money is tight. Economic recessions, a new competing business opening nearby or a sudden change in customer behavior can throw a wrench into your carefully planned budget.
When this happens, the last thing business owners want to do is lay off valuable employees. Although labor costs are among the top business expenses, small businesses are often close-knit communities, with coworkers and management considering one another friends and family, rather than just a name on the payroll.
Longtime employees are valuable assets, as they know the ins and outs of daily operations. In many cases, your employees are the face of your business and the reason many customers return. Layoffs jeopardize this setup while hurting company morale and putting you and your employees in a challenging position. Some layoffs can even have legal ramifications.
If you’re a small business owner who’s fallen on hard times, don’t worry. There are several things you can do to cut costs, save money, and keep your valuable team members.
1. Create a Revised Budget
The first step in a new financial circumstance is to reanalyze and adjust your budget. Consider your new average income and divide your expenses into “necessary,” “unnecessary” and “flexible” categories. Here are some tips to consider while you create your revised budget:
- Eliminate unnecessary expenses: Take a good look at your “unnecessary expenses” category and cut as much of it as possible. For some, it might mean eliminating costs like newspaper subscriptions or Friday lunches at the office. For others, it could be shortening your workweek or daily hours of operation.
- Continue paying down debt: Continue paying on your debt for as long as possible so that you do not permanently injure your credit score.
- Talk to your landlord: If you rent or lease your space, talk to your landlord about options for lowering your monthly payment or cutting utility costs.
- Avoid outsourcing tasks: Avoid outsourcing any tasks that you and your staff can handle. For example, instead of paying a cleaning company to wash the windows or scrub the floors, spend a few hours before or after work to tackle the job yourself.
- Use a calendar: Write down all bill due dates on a calendar so that you don’t miss them and incur late fees or penalties.
Continue to track your expenses and revise your budget as your situation fluctuates.
2. Go Paperless
The average office worker uses tons of paper, and much of it ends up in the garbage before the day is through. Going paperless is a great way to minimize these costs and save on things like ink and postage. It’s also better for the environment.
Some ideas for transitioning to paperless include:
- Send emails instead of holding meetings or sending paper mail
- Use digital collaboration tools like cloud storage, digital filing and shared drives
- Send digital invoices and receipts
- Use e-signatures for important documents
- Scan files and documents onto a computer or cloud storage instead of making copies
When transitioning to digital, do not completely abandon your paper trail. Some customers will prefer a paper copy of their receipt, and technical difficulties can result in significant losses if you don’t have a backup method.
3. Cut Energy Costs
Energy consumption can be a significant part of your overall expenses, even for small and one-room businesses. To keep your utility bill as low as possible, implement the following changes, and ask your employees to participate:
- Plug electronics into energy-saving power strips
- Use natural light instead of overhead lighting when possible
- Turn appliances and equipment off or unplug them when not in use
- Collect recycling and look for centers that pay for recycled materials
- Set the air conditioning or heat lower or off when no one is in the building
- Opt for open windows and sweaters instead of cooling and heating
- Encourage people to use the stairs over the elevator when possible
- Keep all doors and windows closed when the air conditioner or heater is on
4. Work Remotely When Possible
To save on the cost of utilities, implement remote work whenever possible. This process might mean cutting business trips and opting for teleconference meetings instead, or giving employees tasks they can do from home. When transitioning to full or partial remote work, work with your employees to create a policy that makes sense for everyone’s circumstances. Research the best productivity software and project management tools you need for your daily tasks.
5. Choose Vendors and Suppliers Carefully
Reconsider the vendors and suppliers you work with and make sure you’re still getting a fair market price. Whenever you can, choose generic items over brand name and compare costs across multiple vendors.
Make sure whatever new vendors you partner with have a good reputation for providing quality products. Otherwise, you risk wasting that portion of your budget. If you have a good relationship with your current vendors and want to maintain that, ask them about any discounts, promotions or partner pages they have that can help you cut costs.
6. Be Intentional With Your Marketing
Tight financial circumstances are not the time to test expensive or risky marketing techniques. Instead, stick with the methods that have helped you grow in the past, and focus most of your efforts on existing, return customers. There are also plenty of free and low-cost marketing methods you can try out, such as:
- Create your own e-flyers on websites like Canva or Adobe Spark
- Fill out your Google Business profile and keep information up-to-date
- Use social media to grow your network, engage with customers and hold contests
- Look into cross-promotions or partnerships with others in your industry
- Never underestimate the power of word-of-mouth marketing
- Create online content highlighting your business, like blog posts, infographics and videos
7. Utilize Your Network
Unfortunately, some unexpected expenses — such as workplace repairs and employee turnover — tend to arise when you least expect them. When this happens, it’s time to utilize your network.
When you own a business, asking for help from your friends, family and partners can be a powerful tool. Whether you’re trying to find a good deal on a new or used office telephone, need help repairing the awning over your front door, or want to avoid costly job listings for a newly vacant position, let word get around that you have a need.
8. Buy Used
If you need to buy or replace existing equipment, choose used items when possible. Auctions and estate sales are great places to find used equipment like office furniture and appliances for low prices. You can also use online auction sites and discount stores. If you’re replacing a broken or worn item — like a restaurant booth or wobbly table — you can also try fixing it yourself before replacing it.
9. Keep Morale Strong
Make an effort to keep morale strong among employees. Happy employees are less likely to leave. Considering the enormous cost of hiring and training new workers, it’s extremely beneficial to retain as many hardworking, valuable team members as possible. Plus, the happier your employees are, the more likely they are to work hard.
Some ways to encourage a positive, thriving workplace are:
- Be honest and encourage communication: Let your employees know that you’re doing everything to maintain their positions. If money is tight due to a widespread community concern, like an economic recession, then chances are your employees are just as worried and uncertain as you are. Encourage open communication and allow them the space to voice concerns. This step is also the best way to help employees understand how vital it is to follow new rules, like keeping the air conditioning at a certain temperature or minimizing office waste.
- Offer praise and constructive feedback: As you make money-saving changes around the workplace, pause to offer regular feedback to all employees. Praise the ones who excel and encourage those who are doing their best. Offer constructive feedback where needed. Practice empathy and show appreciation where you can. That said, don’t be afraid to correct or release an employee who is slacking off, mistreating other employees, or wasting time and resources.
- Ask your staff for ideas: Your employees know your business better than anyone. After all, they’re interacting with customers and clients, working directly with your product and doing behind-the-scenes work. Ask them what ideas they have for cutting costs and drawing in customers.
Going through a bout of financial strain can feel overwhelming, but a few changes can make a huge impact. Though many of these changes will take time, hard work, and collaboration, it’s possible to save money and keep business expenses low without letting go of your employees.
9 Ways to Save Money in Tight Times Without Layoffs
Source
