While running a business is often a juggling act of different roles and tasks, the one constant is the job of managing the capital used to fund it all. Regardless of what larger social or economic issues might be at play at any given time, effectively managing your business’s expenses and investments is the best way to ensure that it can continue to grow and evolve in the future.
While there are a number of items that business owners monitor in order to more effectively allocate their capital, what follows are four areas that any business can target to cut unnecessary or wasteful spending.
Manage Resources Strategically
At its core, owning and operating a small business is about managing resources. From the talent on staff to the equipment and materials used in production, business owners are trained to make sure all of their resources are allocated optimally.
Of course, after years of conducting business in a certain way, owners can develop blind spots. For example, a single computer left on nights and weekends over the course of a year can add $30 to your annual office electricity bill. While a company that started with less than a dozen employees might not worry about something like energy consumption on a handful of computers, as more and more employees and technology start to crop around the office, it might be worthwhile to look at unplugging unused devices and potentially saving hundreds of dollars a year.
This philosophy works with other common office resources like paper, ink, boxes and whatever else your company might have used on a regular basis at one point, but now aren’t as in demand for whatever reason. Take an inventory of recurring orders and usage you might have for resources like these and see where your business can cut back without compromising output.
Renegotiate And Consolidate Expenses
Some of the largest recurring costs to any business are the deals you make with your vendors, suppliers, and insurers. Often, these relationships are long-standing, and it can be difficult to imagine working without a trusted third-party supplier.
However, if cutting costs is paramount, actively communicating your needs with these vendors can reduce your expenses and ensure you receive the best offer available. Usually, vendors and insurers will work with you to provide discounts or packages that will ultimately help save you money while keeping your business relationship going. After all, they need your business too.
However, this approach also means being willing to seek out alternatives to your vendor or provider. If you can shop around for the best deal for your company, your vendors should be able to price match or at least come up with a competitive offer. While the conversation may be uncomfortable, understanding your company’s needs and conducting thorough research about the cost basis other companies have will give you the best position to negotiate and come out ahead.
Seek Out Freelance Talent For One-Off Tasks
Every business occasionally has an odd job that crops up every now and again. And while hiring a part-time graphic designer, copywriter or event coordinator would be useful, it’s often not necessary or practical.
Broadening relationships with freelance or contract workers can help fill small but critical gaps, and finding freelance talent you can trust to deliver consistent results can often be more valuable for both your company and the freelancer than a full-time arrangement.
There are plenty of avenues to find good freelance talent, especially talking with friends or employees who might know someone they can vouch for personally. And while there are online marketplaces like Upwork or Fiver where you can find talent, be wary of bad actors who might be misrepresenting their work or angling for a quick buck. As most business owners quickly learn, the cheapest option is not always the most affordable one.
Invest In Promising Talent
Finally, along those same lines, investing in the employees you have is the best way to build up the viability and reputation of your business. That, of course, means rewarding employees who are masters of their job with more responsibility and higher wages, but it also means being creative with how you scout and add new employees to your team.
Hiring is never an easy process, and even highly qualified candidates have their drawbacks. The best bang for your business’ buck when looking for new employees is to generally seek out potential candidates who may not have the most experience, but show an aptitude for their field and are confident in their ability to learn. These might be recent graduates, those in apprenticeship programs or simply those with a diverse or interesting resume, but in any case, they will likely come with lower salary requirements than a seasoned veteran.
Although it may be a more time-intensive option, hiring and educating new talent can be useful in training someone to the specific requirements of your business who will eventually grow into the role of a decision maker. As an added bonus, someone with a fresh perspective can often suggest a new way of approaching old problems that adds incredible value.
Like any investment listed above, the goal is to ensure that the time spent upfront thinking, researching, and doing the work will pay off in the following months and years.
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