As a small business owner, you’re familiar with doing more with less. You know that to survive and thrive, you need to optimize every dollar you spend.
The good news is that you can be very efficient with your spending without sacrificing your company’s success and growth. You just have to know what’s essential and what’s not.
Are you looking for cost-cutting measures you can use right now? We have exactly what you need. Here’s what matters — and what doesn’t — in a small business.
Avoid Vanity Purchases
Small business owners often get drawn into trying to look like a Fortune 500 company, and it costs them. You look at what big successful companies have, and you want the same things. So you pay for fancy office space, company swag, and other unnecessary items.
That doesn’t mean you can’t learn from larger companies. In fact, there are a lot of great best practices on cost-cutting you can pick up. But don’t try to emulate them in the wrong ways.
Instead, focus on what contributes to your bottom line. A first-class ticket to that conference isn’t likely to make a difference when streamlining your processes or software will.
Review Your Subscriptions
Another expense that can add up quickly is your subscriptions. Today, it’s very common to sell software and other services as subscriptions rather than one-time purchases. This practice can make premium software much more affordable to a small business.
However, if you have software you aren’t fully using, you’re wasting money. Take a look at all of your subscriptions. Are you using all the features? Can you move to a lower tier that makes more sense for your company? Or switch to a different service that offers what you need at a more affordable price?
Don’t think about “what might be nice.” Focus first on what you’re actually using. When you need more capabilities, you can upgrade at that time. Optimizing your subscriptions can help you avoid cash flow problems in your business.
Use Low-Cost Marketing
It’s exciting to imagine your company name in lights or watch a commercial for your business on prime time television. However, that’s an expensive and less effective approach to marketing. You can do a lot to reach your target audience without the high overhead.
Inbound marketing and search engine optimization (SEO) are great long-term strategies that cost far less than flashy advertising. You create content that meets customers where they are and draws them into your marketing funnel. Prospects grow to know, like, and trust you. When they’re ready to buy, they seek you out.
You can also use social media to identify and target your ideal customers. Social media is used by millions of people every day, and you can use built-in tools to segment the audience in a very detailed way. Best of all, social media can give you immediate wins while SEO and inbound marketing get established.
The key is to focus your money on what brings in customers, not on vanity metrics like followers or likes. You can use direct response strategies to track your efforts and then focus your budget on what works best.
Look For Funding Assistance
While bootstrapping is both a popular and frugal way to fund your company, you have a lot of other options as well. When you get help with your funding, you’ll have more money to grow and improve your company.
If you’re a minority, there are special loans and grants available just for you. Minorities typically struggle to get approval for loans, and the Small Business Administration (SBA) has specific options set up to address these disparities.
The SBA has other opportunities for small businesses as well, minority-owned or not. Often, an SBA loan has more flexible terms and repayment options than a traditional bank loan. Beyond the SBA, you can also use crowdfunding to raise money for your company directly from interested customers.
No matter how you raise funds, make sure you have a plan to use the money wisely, so your company gets the maximum benefit.
Be Sure You Invest in What You Need
Where many business owners make the mistake of overspending on non-essentials, others make the mistake of not spending on what the company truly needs.
Cost-cutting should never go to the extreme that it damages your business operations. Making the right investments can help you excel. For instance, you should never skimp on business planning, marketing, or legal advice.
Invest in accounting help and tax preparation, and don’t overlook customer service. Excellent service helps you not only gain repeat purchases, but you can turn delighted customers into brand evangelists. That kind of marketing leads to incredible growth at very little cost.
Cut Costs And Spend Wisely
There’s a reason people often say “it takes money to make money.” Wise investments in the right parts of your business are essential to success.
However, so is cutting costs. There’s no need to spend on vanity buying, subscriptions you’re not using, or high-cost marketing. At the same time, you can look for additional funding to help you grow more effectively.
When you combine these strategies, you’ll be on the road to success.