In business, even a beginner fully understands that if the net profit your business makes is below the cost of fixed expenses every period, then you simply cannot hope to sustain the current model. Since fixed expenses are a reality for every business, then the goal must be to optimize them – which basically means to reduce them without reducing the quality of your product/service.
An Accounting of Fixed Business Expenses
Business is, of course, dynamic – but there are expenses that you can always count on. These include rent, property taxes (possibly, if you own the building), the leasing of equipment, software licenses, loan costs, utilities, insurance, employee salaries, taxes, equipment depreciation, financial retainers and more. Although there’s a bit of variation in the above, most of these expenses are standard for any business. In the next section, we see the many ways in which you can reduce these fixed business expenses.
Staying in the Blue: Business Expense Reduction Tips
- Most businesses operate using suppliers; hence, it is a great idea to make sure you’re always using the ‘best’ ones. Best, in this case, means the best service at the lowest cost; having an updated list helps you keep track of this. Oftentimes, suppliers package services with elements that you may not actually need, and you can cut costs by identifying these and perhaps supplementing using another service.
- Utilities is another area in which you can save; particularly by supplementing the electrical grid with solar panels. Still, using lightbulbs? They are very inefficient compared to halogens and LEDs – consider swapping them out.
- Look for ways to save with insurance. For example, if you install a camera system on your property, and alert your insurance provider, you can get your premiums reduced. Never overlook insurance policies that exist to cover unforeseen events – especially if your business is in an area that is prone to inclement weather.
The above are just a few examples; you can save money in a multitude of ways including bartering for goods instead of buying them, inventory optimization and many other ways. Visit the Sudden Rivers Capital Corp for a surefire way to reduce business expenses this year.