The Millennial Entrepreneur’s Guide to Business Savings

We live in an age where constant inflation drives up fuel, energy, and lifestyle costs. It’s one of the many challenges many startups and small businesses face, as high inflation affects the prices of goods and services, forcing many businesses to spend more.

The good news is that many companies can cut costs without sacrificing operations, quality, or revenue. Implementing a cost-effective process minimizes overhead and does not take much time and effort. Changing little things, like going paperless or watching your water and electricity use, can make a big difference.

There are several strategies you can use to reduce your expenses. This article will discuss some practical steps to increase business savings without losing operations or reducing profits.

Monitor and Track Expenses

The highest operating costs for a startup are staff salaries and expenses such as rent, utilities, and rates. Conducting an energy audit is one way to monitor and track your business’s utility expenses. This will show you where you can cut back and where you are overspending.

Research by The Energy Trust shows that being more energy efficient can reduce business energy bills by 20%. For many companies, a reduction in energy costs has the same financial impact as a 5% increase in sales. Making a few simple changes can save your business money in the long run, such as: 

• Switching to energy-efficient LED light bulbs can save up to £400 per year. Use motion sensor lighting in rooms that are less frequently used.
• The location of your business can also be the reason for a higher energy tariff; read more about startup energy costs and why they differ region by region. Although you cannot control your postcode, you can still search and compare energy suppliers to find the best deal.
• The cost of running your air conditioner during the summer can go up by up to 30%. However, cleaning filters, condensers, and heat exchangers can increase performance and lower operating expenses.
• Unplug unused equipment and appliances. According to British Gas, unused plugged-in devices, equipment, and appliances waste 23% of vampire energy.

Invest in Technology and Management Tools

Many simple and effective technological solutions can streamline your daily operations. Investing in tech and management software and tools is also exceptionally cost-effective. 

For example, consider using VoIP for your company’s phone system to cut your telecom costs. Going paperless and moving to the cloud can also provide cost-saving features like virtual data storage, system development and hosting platforms, and virtual workplaces. Investing in enterprise cloud services can be particularly beneficial for cost savings.

Using management software and tools, you can run your daily operations, keep track of reports and expenses, and only need to update the software occasionally. Whether you need project management software or a way to keep your accounting records current, various tools are available to suit different business needs.

Consider Coworking or Shared Office Space

Sharing office space with other businesses may be more cost-effective for startups and small businesses that don’t need an entire office. Coworking and shared office spaces are becoming increasingly popular among small teams because they offer a good working environment without the high costs and hassles of lengthy and expensive leases. 

Working in a coworking space can save you money on rent and utility bills. There is also no need to buy furniture; you benefit from sharing a reception area, printers, desks, computers, and internet at a fraction of the price.

Because you will only be paying for a desk and the essential amenities, this shared arrangement allows for higher-quality office amenities and decreased administrative costs.

Outsource

Not everything needs to be handled internally. Without having to pay full-time wages, you can fill in the gaps in your staff by outsourcing specific tasks and responsibilities. Office supply costs, as well as other overhead costs, can be reduced.

A good example is outsourcing your payroll or accounting, which will give you peace of mind knowing that experts are handling your accounts. The wonderful thing is that discontinuing to use of third-party services is simple if you need to cut back.

Look At Supplier Costs

Researching your vendor or supplier options can help you save money. Some suppliers and vendors are more than willing to renegotiate agreements or contracts and offer discounts when necessary. If suppliers cannot offer discounts, they may still be able to provide you with add-ons that will help you save a lot of money and cut down on your procurement costs.

You can discuss discounts with your suppliers in exchange for early payment or bigger orders. When a supplier regularly and in large volume supplies your direct materials, even a small discount percentage can result in significant net savings.

Final Thoughts

Running a successful startup requires more than generating revenue and monitoring your expenses. The costs of running your day-to-day operations can add up quickly, affecting your bottom line and resulting in cash flow issues. However, these five tips can help you lower overhead expenses, generate revenue, and increase your business savings. For other startup news and advice, check out the other articles on Grit Daily.