How to Save Money as a Small Business Owner
Small Businesses Feel the Impact of Rising Costs
We are hearing a lot of about how consumers are feeling a significant pinch because of spiraling inflation costs. Small businesses are facing their own constraints—from higher prices to delays in supplies. These typically have a bigger impact on small businesses than larger businesses. Specifically, unlike bigger counterparts, small businesses have fewer options and less leverage.
A Small Business Pulse Survey conducted earlier this year found that almost 3 out of 10 small businesses said they have seen large price increases since March 2020. When the last six months are factored into the equation, 41% indicated they have experienced large price increases. And while the response from small businesses varied from state to state, 80% of small businesses in 24 states indicated they had experienced moderate to large increases in prices.
Ways Small Businesses Can Save Money
These cost increases are certainly unwelcome news for small businesses that are under cost and margin constraints, even under normal circumstances. The upside is there are ways for small businesses to reduce their costs.
Lower Your Labor Cost
The tight labor market makes headline news on an almost daily basis. Thus, for many small businesses, cutting labor costs may seem like a difficult—if not impossible—undertaking. The reality is that many small businesses limit their options when it comes to labor. Not every role needs to be filled with a full time equivalent headcount. Some work can be outsourced in an on-demand fashion. While the cost per hour might be greater, the overall cost could be lower.
For headcount that does not need to be onsite, small businesses should consider remote resources—including those overseas. Upwork and other freelance aggregation solutions enable small businesses to think outside of the U.S. or their native country. In these instances, small businesses need to carefully evaluate freelancers and determine which ones are suited best to meet their business requirements. Start small and test out a freelance resource before handing them a large project is a good idea.
Eliminate or Lower Your Office Costs
Small businesses were already abandoning permanent office spaces for virtual office arrangements before the pandemic. This accelerated during the pandemic, and while some small businesses have turned back to offices as the pandemic eased, others have no plans to return to permanent office space—with employees working from a combination of home offices and coworking spaces/day offices. This can save upwards of $11,000 per employee.
While some employees can thrive in a home office setting, others struggle due to loneliness and the lack of professional engagement and networking. Virtual office space is a good option for these workers, who can spend some days working from their home office and other days working from a coworking space like those from Davinci Meeting Rooms.
For small businesses that no longer have a permanent office location, professional addresses like Davinci Virtual Offices are a great option. These highly professional virtual office addresses provide small businesses with a location that demands immediate respect (first impressions count), as well as various services such as mail receipt and forwarding and lobby directory listing.
Leverage On-demand Live Receptionists
For some small businesses, having a receptionist to answer incoming calls and emails is a requisite. Small business owners are busy running their businesses and aren’t available to answer every phone call and email. But full-time equivalent receptionists are expensive, and only part of their time is spent fielding incoming calls and responding to incoming email.
A virtual receptionist service like Davinci Live Receptionists is a much more cost-effective solution. Teams of virtual receptionists are available on demand, and you only pay for the time they spend answering calls and responding to emails.
Limit Travel Expenses
Business travel can tally up into substantial expenses over time. Small businesses feeling the pinch of inflation should carefully evaluate their travel policies and the amount of time employees spend on business travel. While face-to-face meeting are useful and important, they aren’t always necessary, and small businesses can reap measurable savings by cutting back on their business travel.
Schedule Meetings in Rented Meeting Space
Maintaining permanent office space that includes professional meeting space is expensive. For small businesses that have eliminated permanent office space altogether, you have no choice but to look for alternative meeting space. Coffee shops are one option, but they are noisy, lack privacy, and do not provide the professional experience you need to convey. Hotel meeting space is expensive, and it often does not come with the presentation and collaboration tools needed to execute a successful meeting.
Rented meeting space through providers like Davinci Meeting Rooms is half the cost of hotel meeting space, and it comes with the tools and services you need—video conferencing for virtual participants, collaboration tools, catering and beverage services, a lobby greeter, administrative support, and more.
Get More Efficient with Project Management
Many small businesses find it difficult to manage time and projects. There are a lot of balls to juggle, and it is easy for projects and activities to get off track. Small businesses may want to look to time management and project management subscription tools to ensure the team can stay on top of everything. These cloud-based tools are inexpensive and typically priced based on seats consumed—enabling small businesses to predictably scale their usage. When used effectively, these tools can improve employee productivity, which can indirectly help decrease costs.
Leverage Interns: Get Benefits While Giving Back
Interns can be a cost-effective alternative to a part-time or full-time employee. More and more high schools, community colleges, and four-year universities seek to place students with businesses so that they can gain valuable experience. Consider the P-TECH program in Fremont County, Colorado, where 49 high school students serve as interns for local businesses that operate in the TechSTART and Emergent campuses. In addition to providing them with mentoring, job shadowing, pre-apprenticeships, and other work-related experiences, these businesses get additional scale. Small businesses should reach out to their local high schools and colleges to get involved in their internship programs. This gives them a chance to give back to the community while receiving assistance at the same time.
Reevaluate Your Technology Investments
Digital technology is a great value, and many small businesses cannot operate without it. But the plethora of technology options out there today can result in a “soup” of tools that are redundant and fail to integrate. Thus, it is important for a small business to assess your technology investments every year to determine where overlap and deficiencies exist. Certain tools may not be needed, as the functionality is available in other tools that have been acquired (or added into existing tools). At the same time, while some tools may be great, they may reside in silos that create extra work. In these instances, it may be better to migrate over to other tools that integrate better—improving efficiencies and reducing costs.
Lower Cost Equals Improved Growth and Margins
Today’s business environment is highly competitive, and rising costs can have a significant impact on a small business. Finding ways like the above to reduce your costs can help improve margins and even accelerate business growth.