Tips on Saving Money in Your Small Business
Small business owners spend a lot of time trying to drum up new business, but rarely look at cutting costs as a way of making money. In reality, slashing expenses can often increase overall profit margins much more than adding a new client or landing a new project. We’re all busy, but going through evaluating expenses regularly is just the smart thing to do.
Where can you save money? Let’s take a look…
Website Hosting & IT Costs
Are you upgrading software you don’t need anymore? Does your website _really_ need a dedicated server? We recently moved one project from a large $500/month dedicated server to a $50/month virtual server and are saving over $5,000 a year! The website still has room to grow into larger VPS packages, and it will be quite some time before we need a dedicated server.
Do you really need Microsoft Office? Could you switch to Google Apps instead? If you have four workstations, that’s $2,000 in license fees that could be saved by switching to a simpler solution.
Credit Card Processing
If you process a lot of credit cards, you should be getting a quote for processing every few years. Look online for vendors, as local banks and merchant providers are often the most expensive. We see a lot of clients that are paying 1-2% too much for processing. Do the math, that amounts to a lot of money over time. If you process $20,000 a month in credit cards, that’s paying $2,500 to $5,000 too much.
Also consider whether you need a merchant account at all. If you are processing less than $2,000 per month, it is likely less expensive to use a third party option such as PayPal.
Printing or Shipping
We ship a lot of packages in our e-commerce company. We recently started shipping some packages through the United States Postal Service instead of UPS, and are saving upwards of 20% on those packages. We have also recently requested new bids from UPS and FedEx as our volume has steadily increased over the past few years. Request new quotes annually, be sure to leverage the fact that you’re opening your account for bid to get even lower rates. Let UPS know FedEx wants your business!
The same applies to printing and other vendors, shop around. You’d be surprised what you can find. We switched to a trade printer that saved us 80% over what we were paying a local printer for full-color business cards.
It sounds harsh, but are you paying employees to sit around doing nothing? If business has slowed, it may be time to let someone go. Similarly, if you have an employee that isn’t performing, letting them go can free up a substantial amount of money that can be used to hire someone else, or simply increase your profit margin.