Not every small business owner loves dealing with the nitty gritty of numbers. Many enjoy other aspects of running a small business like the day-to-day interactions with partners, employees, and customers and making an impact on the community. For business owners who do not love getting too involved with the numbers, here are some tips to help keep business costs down.
1. Avoid employee turnover
One of the best ways to keep costs down has less to do with actual finance. If you’re a people person, here’s the chance to put that skill to work. As Entrepreneur points out, high employee turnover is not good for your business profits. This is why it’s absolutely crucial that you are careful and patient when it comes to hiring and managing your employees. You should be very careful to hire only the strongest employees and avoid firing people if it’s possible to teach them how to be better for your company.
You know interns, right? It’s those eager-to-learn people who will do a lot of work for very little. If you offer internships at your business you can give people a platform for gaining valuable work experience, while getting labor for free or close to free. You want to treat your interns fairly, so you should never mislead anyone about the nature of the internship. Don’t mislead them with permanent position possibilities if there are none. Don’t suggest they will be paid more eventually if they won’t be. As long as you and your intern have an honest understanding of the situation, it can be a win-win for everyone involved.
3. Variable vs. fixed costs
As you’re getting started, you may want to do all you can to tip the scale toward variable business costs as opposed to fixed costs. Fixed costs, like employee salaries, advertising budgets, rent, etc. are just that — fixed. They are unable to be crunched in a business budget. By trying to make things more variable, like making a larger portion of employee pay tied to business performance bonuses, or by renting tools and equipment instead of buying it, you can give your accounting department more flexibility.
4. Focus on the small stuff
It’s easy to lose sight of the forest for the trees, but it’s also easy to think too much on a macro level. Small businesses especially benefit from taking the micro steps to reduce costs. For example, keep a tight and detailed supplies inventory list and update it every week. Make adjustments to how much of something you buy — even if they seem small and unimportant. Get a programmable thermostat or automatic lighting around the office to save on energy costs. Go digital on as many files and programs as you can to save on paper costs. Focus on travel costs and make sure you and your employees are finding the cheapest flights. As MoneyCrashers.com points out, encouraging telecommuting can save you in-office costs like supply and utility use.
Not everyone that runs a small business is “a numbers guy.” In fact, the down and dirty finances may not interest you at all as long as you’re successful in the large scale. For people like you, it’s vital that you know some practical and also personnel-based ways to reduce costs – especially if your business is in its budding stages. Healthy, successful businesses run lean. Your job as business owner, among many other things, is to always be looking at how to trim the fat.