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When you own your own businesses, one of the most prudent decisions you make on a daily basis is where and how to spend money. A business has various areas of spending, all of which have fiscal multipliers attached. This means that while some costs may not offer any direct return on the investment (such as consumables or furniture), others will yield a return that may eclipse your initial investment (such as better tools, more efficient software or advertising/ marketing).
The key, then, is to invest more heavily in areas that will provide higher yield, while cutting down on operations costs that can be avoided. There are literally dozens of ways in which a business can save money on operations costs from using heat cable to winterize their pipes without spending a fortune on heating to telecommuting from home to avoid office overheads. Here are some money saving tips that can help any business cut operational costs:
Outsource
Many entrepreneurs avoid outsourcing to save money and thereby end up wasting time and resources on trying to do everything themselves. This is, of course, false economy. Many build their businesses around their personal strengths and areas of expertise. Outsourcing areas like marketing, social media management and advertising to specialist companies is likely to offer you a return on your investment and free you up to play to your strengths.
Go green
As well as setting a great example and being good PR, being as green as possible can save on operational costs. Simply using energy saving bulbs can save most businesses over $100 a year. Communicating through email or social media and limiting your postage to the bare minimum can save you money on wasteful paper and stamps. Investing in improving your insulation will also save on your heating and cooling costs all year round.
Pay your vendors on time
While entrepreneurs are busy folks, who are constantly dashing around spinning plates, it’s important to keep on top of paying your vendors. Most will charge fees for late payments while offering discounts for early payments. While these discounts are rarely above the 5% mark, these can really add up over the financial year.
Incentivize employees to identify opportunities to cut costs
The most effective tool in combating waste is vigilance. You should always be looking at ways to make your operations more efficient in terms of both time and materials. But, let’s face it, you’re only human. Your employees are a great resource, and tend to be full of interesting ideas. Hold weekly or monthly contests to incentivize your employees to come up with money saving ideas.
Cancel any services not being used
Many services know how busy you are and will try to capitalize on that by setting your web hosting and other services on “auto-renew” by default. This can lead to entrepreneurs wasting money on services that they either don’t use or have replaced with other, more efficient solutions. Ensure that services you don’t use or intend to renew are not set to auto-renew.
