What business isn’t trying to cut costs, streamline expenses, or save money? The less the business spends usually means the more profit the business makes. There are lots of ways that you can tighten things up around your business including re-evaluating phone plans, buying generic brand coffee for the break room, or even turning down the thermostat. That said, for the sake of your business, there are some things that should not be cut back on.
4 Expenses a Small Business Should Not Cut Back On
1. Vacation Time
There are no federal laws that require a company to offer any type of paid time off. However, certain states do have regulations in place for it. I know it can be painful to pay employees for days that they are not actually working and slashing vacation time can seem like a very tempting money saving option, but don’t do it.
Fringe benefits such as vacations and paid sick leave help your business to be competitive when it comes to recruiting and hiring talented employees. You want the best people working for you, so give them a reason to want to work for you. Furthermore, cutting paid employee vacation will really lower employee morale, and lack of a break can lead to employee burnout.
Changing paid time off policies can be tricky so you need to make sure you are staying true to all employee contracts as well as state regulations. If it works for you, instead of cutting vacation time all together, you could tweak the vacation accrual policy.
Other money saving options include trying to accomplish maintenance tasks such as painting in-house by using your employees. This is an especially helpful strategy during slow times when there might not be enough traditional work to go around.
2. Content Marketing
Your business has jumped on the blog bandwagon, you’ve heard about inbound marketing, and you often send out email blasts. All of these are good strategies–if you do them correctly. Using content as a marketing tool is only effective if it is good content. Trying to save money by adding “blog” to the job description of your busy controller or receptionist may seem like an easy way to check off the box. But, if they don’t have the time or the expertise, that’s just a waste of your time and money.
Looking for freelancers. Websites such as Upwork make it easy to connect with freelancers. Or, if you live near a college/university check in with their writing department. You may find an inexpensive and talented college student willing to work for a little bit less in order to gain experience.
3. Financial Advice
Especially when you are getting started, there are a lot of tricky aspects to a business’ finances. From choosing the correct entity type to filing taxes, you want to make sure that things are done the right way. Having a knowledgeable person able to guide you with tax regulations and compliance and offer tailored advice based on your company’s data is really priceless.
Outsourcing your accounting. You don’t need to keep a full time accountant on staff in order to reap the benefits that a high quality accountant can offer you. Outsource your accounting to a firm that specializes in this.
4. Product and/or Service Quality
We all know of companies that make quality products and companies that don’t. We all know of businesses that offer outstanding service and others that don’t. For the most part, many companies know what kind of product or service they offer and price accordingly.
You know what level of quality product you produce and so do your customers. If that gets changed, you are no longer the same business. It won’t matter how happy your employees are, or how great your blog content is if you don’t have the quality to back it up. (That said, if your business decides, after many discussions, to pivot and go another direction with what it offers, that it is a different story.) Quality is not something you should cut back on.
Shopping around to different suppliers for materials and even asking for discounts or deals. Cutting back in other areas, such as paid advertising, for a short amount of time. Evaluating how office space costs can be cut by moving to a smaller office, leasing out unused areas, or moving to a less expensive area. This is a good opportunity to make every little thing count: turning off lights, adjusting the thermostat, changing out the soap in the bathroom etc….
Each business is unique, which means that every business will find a different solution for saving money and cutting back on costs. Take the time to observe your business, its processes, and its employees in order to come up with a plan of action for a tighter budget. Ask for employee input as well, and don’t be rash in deciding where cuts should be made in the company. For more advice, contact us at Lumen Advisory and Finance!