5 Ways SMEs Can Cut Business Expenses

Reduction in expenses is a vital goal in operation in every business. Reduced costs and increased efficiency denote sound business health. Efficiency is attained when the business achieves maximum productivity at a minimal cost.

There are some costs that are inevitable to the running of a business and must be incurred. However, some expenses which are not so essential can be reduced. To embark on a cost reduction strategy, one should note that the reduction should be Permanent, that is, the reduction should not be a short-term one. The reduction should also not be at the expense of the quality of the product or services rendered.

Here are 5 ways that can help reduce overall costs;

1. Optimize workspace- some businesses have a large building or workspace that is not fully occupied. In this case, the firm can sublet the space and receive rent regularly for it. Small businesses also have the option of using a co-working facility rather than having a structure of their own, this would help to reduce cost. Another way to reduce building costs is to embrace remote working if the nature of work is one that can be done virtually.
2. Use Automated systems- This helps to improve productivity, reduce cost, and is more reliable. There are several aspects of a business that can be automated one of which is the Accounting function. It avoids the cost of establishing and running an accounting department in-house. It is also very reliable as there is an absence of human errors and breakdown. Accounting software is fast and accurate. An example is Accounteer, this is an online accounting software to manage finances for business owners.
3. Social Media Marketing- Marketing cost contributes largely to operational expenses. The utilization of social media can help to solve this problem. Businesses can use social platforms to advertise their business, engage existing customers, and attract customers at a reduced cost. It involves promoting your content to the target market on platforms like Facebook, LinkedIn, Instagram, etc.
4. Pay Bills Early — This will reduce expenses by yielding discounts. Cash discounts are allowed to businesses that pay early for goods purchases. Delaying payments will allow interests to accrue on the bill thereby increasing costs.
5. Proper inventory management- Inventory is one area that should be paid attention to. Buying a large quantity of stock at once is not advisable as it can lead to wastage or pilferage. The entity can also engage in regular stock-taking practices, this might help to study the movement of stock and determine appropriate levels of inventory. The software can be used for inventory control and monitoring. An example is Microsoft Power BI.