Unless you have been highly diligent in tracking how your business spends money, chances are you may be putting out more than you need, which is directly impacting your profit margin.
If you are struggling a bit, it is high time to take a good look at where your money is going to see where you can make some cash-preserving tweaks. Here are some tips to cut your business expenses.
Track Expenses Diligently for Three MonthsBusinesses, just like your everyday average person, is spending money left and right without really giving much thought to where it is going. If you are truly interested in cutting your expenses, you need to get a clear picture of how your business is spending its money.
For the next three months, track every single expense in your office. Once you have compiled this list, go through it with a fine tooth comb to see where you can cut back. Maybe you are buying way too much paper or you are paying for a larger data plan than you need. When your expenses are laid out in front of you in great detail, you will be able to better tell what is essential and what is not.
Ask Creditors for a One-Time Debt ReductionIf you are struggling to pay creditors, and monthly payments and interest are eating up money that would be better spent growing your business, you might consider negotiating your debt.
While they obviously prefer you to pay back all that you owe, if they believe your economic struggles may result in getting none of it, they may be willing to write down a portion and take anywhere from 40 to 60 cents on the dollar; it is important to be able to show that you are adopting new strategies to cut business costs in the future and that this debt reduction is a step towards being a financially healthy company.
If you do attempt this, it is probably a good idea to have at least a decent chunk of cash to make a dent in your new debt load, or else this offer may not seem as attractive to the lender. If writing down part of the debt is not an option, you might consider asking if they can convert the credit debt into a low-interest loan.
Reduce Packaging CostsPackaging costs often make up a good chunk of business expenses and if you have not carefully evaluated your methods and materials, it may be a bigger burden than it needs to be.
First off, you want to evaluate the type and grade of boxes you are using to determine if you can make some cost-saving changes. If you have more than two inches of empty space around your goods, you can probably switch to a smaller box since this is about all you need to keep a product safe. Maybe your current boxes are offering a level of protection that is not necessary for your goods and you can switch to a lower-rated box that will still adequately address your packaging needs. If you are using extra bagging, eliminate some of it. Re-use filler and other materials that you get from packages sent to you.