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15 Practical Ways To Reduce Business Costs

15 Practical Ways To Reduce Business Costs

As a business owner you can’t stop for searching new ways to reduce business costs and gain more profits. Otherwise, your business will never thrive. By implementing these 15 simple strategies within a year, you’d be able to save thousands of dollars in net profit!

1. Take advantage of the freelance workforce

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    A recent study predicts 40% of the U.S.’s workforce will go freelance by 2020. Why not start taking advantage of a temporary team from day one and avoid paying huge overheads and adding up costs like sick leaves, training, vacations, insurance, and so on? Having a flexible team working on a per-project/task basis will significantly reduce your business operating costs, improve overall key performance indicators, and will allow you to focus on more important tasks while minor things are getting solved by your dedicated virtual assistant. Nowadays, you can basically outsource anything, from handling emails and managing your FB business page to complete website design and full-cycle development projects. Besides, hiring a specialist abroad may cost you less than hiring someone with the same skill set back at home.

    Most popular freelance marketplaces:

    All types of projects

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    Micro jobs and small, simple tasks

    Design

    Coding and web development

    2. Start an internship program

    Sometimes, having a remote worker is not an option as you need help onsite—say, sorting out that huge pile of papers on your desk. Get in touch with a local college and offer to establish mutually beneficial relationships—you get a free workforce; they get a cool company to send students to. Win-win. Alternatively, you can post an advert online at sites like Urban Interns and check out all the rising stars eager to work with you for a shining resume credential and real hands-on experience. Moreover, there are high chances of discovering true talents to hire afterwards as part-time or full-time assistants who already know how to things get done at your company.

    3. Use energy-efficient appliances

    Utility bills eating up a huge chunk of your income? First of all, opt for compact fluorescent light bulbs. They cost more than the usual bulbs, however they function longer, thus saving you a pretty penny in the long run. Secondly, consider switching to energy-efficient appliances, particularly those with the Energy Star label. Again, they do cost more, but you can cut down the expenses with numerous government-sponsored rebates, along with making your biz eligible for green energy tax credits. If you need professional advice on making your company more energy efficient, just ring up your power company and request a free energy audit. An inspector should come to analyze your workplace and suggest further ways to reduce energy consumption.

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    4. Keep a virtual office

    If most of your team works remote and you don’t have an ongoing need to gather at one place, why should you bother to pay huge rent for the office space? Business meetings can be held at any venue, co-working space, or conference hall. However, you still like to keep things looking professional and earn your credits, right? And occasionally you do need to fax something or print a bunch of promotional materials. If that is it, most virtual offices provide you with temporary printing solutions at a flat rate; VoIP phones with a personal voice message box; corporate mailing address; a dedicated receptionist handling your calls and a bunch of other cool perks that tend to cost a tiny fortune when implemented at a regular office.

    5. Barter

    So you run a small writing business. Have you ever though of offering your professional editing services to have a marketing campaign developed for you in return? Bartering is no longer difficult with a number of B2B barter sites like U-Exchange and TradeBank gaining huge popularity among small and middle sized business owners. Set up an account and start exchanging services you need! Besides, it’s an excellent way to grow your business connections and score potential customers or partners.

    6. Go paperless

    Do you really think you need those copies printed for everyone? Now look at your monthly printing costs and think again. Still opting for paper bills and invoices? That’s stone age with so many online payment and invoices systems available at reduced costs. Retain your clients with email marketing and ditch mailing coupons and advertorials by snail mail to cut down the costs even more!

    7. Re-examine your phone plan and ditch your land line

    Are you sure you have the best cellphone plan currently available on the market? How long has it been since you last checked the prices? If you signed up for your plan more than two years ago, it’s definitely not the best option available on the market today. If you need to make international phone calls frequently, use Skype or Line, an app that has lower prices. Moreover, swapping your land line for VoIP or a virtual phone line will save you a big bucks at the end of the day.

    8. Don’t be shy to ask for a discount

    Take the nerve and ask the retailers directly whether they can give you a discount as a small business owner. Surprisingly, most will say yes if you are shopping for big ticket items. Alternatively, sneak around for coupons and special deals, sign up to retailers’ newsletters to be the first to know when certain items come on sale, plus get a few money-saving apps installed on your phone to receive instant alerts.

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    9. Invest in self-education

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      If you feel reluctant about paying yet another one-time consultants to solve the problem for you, spend less on self-education. Or pay nothing and gain lacking knowledge at one of these 25 killer educational websites. There’s no better investment than education and in the long-run, spending time and effort on learning something new will pay off later on!

      10. Buy used equipment and furniture

      Shopping in thrift shops and bargain sales is no longer shameful. It’s trendy. Loads of businesses prefer to equip their offices with shabby vintage stuff costing pennies instead of luxury designer goods (that often look pretty much the same). Businesses claim to save up to 60% costs merely buying used office equipment like computers, faxes and printers. Scroll through Craigslist, check out your local paper classified and online auctions like eBay to get everything you need at least two times cheaper.

      11. Cut back on paid software

      Nowadays there’s an open-source free alternative to nearly any product at the tech market. Unless a specific software is absolutely crucial for keeping your business running smooth, get rid of it! Microsoft Office can be replaced with Open Office or Google Drive; Basecamp has a free, similar-looking alternative Trello and you can create beautiful online and PDF designs with free photo-editing tools like Canva or Picmonkey instead of using Photoshop. Which leads as to the next point…

      12. Conduct timely technology and services audits

      How many paid apps and subscriptions do you currently have? And how many are you actually using? Bet these two numbers differ quite a bit. If you have not used a certain technology or service for the last 90 days, it’s time to cancel your subscription and stop paying for things you obviously do not need. Make it a rule to review all the paid products you have every two months. Moreover, before getting yet another piece of paid software, visit Download.com and try hundreds of software products for free through trial downloads, limited versions, and freeware to make sure that it’s indeed a product you need.

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      13. Eliminate finance charges

      A lot of businesses lose thousands dollars annually on ridiculous things like high membership fees on business credit cards, late loan payments and credit-card processing fees. By simply staying on top of bills and paying them exactly when they are due, you will save your business a great amount of money each year. Yes, keeping up with the bills can be complicated, so try to automate as many financial processes as possible by implementing online payment systems and setting up special alerts when bills are due. Also, pay a visit to your bank and ask what better credit card options they can offer you as a business owner.

      14. Opt for online advertising

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        Does your business have a Facebook page and Twitter and Pinterest accounts? Do you have a website properly optimized for mobile search? In 2015 if your business is not online, it practically does not exist! Compared to traditional marketing and advertising, promoting your biz online allows you to get faster results with less money spent. Start small by adding a blog to your website, offer expert advice, reach out to new media and bloggers with thrilling stories you can share, invest some time and money in social media marketing, and optimize your website properly to get a huge amount of targeted traffic and new customers.

        15. Use the power of co-opetition

        Team up with fellow business owners to collaborate and share expenses when buying new supplies in bulk. Moreover, you can group even further and jointly promote a sidewalk sale, share mailing lists and distribution channels with businesses offering complementary goods or services that may interest your customers. Also, you can exchange advertising spaces on your websites, share each other’s coupons and special deals (for a small fee or percentage from each sale made) and occasionally appear at each other’s business blogs to boost your rankings and attract a new audience to your websites.

        Featured photo credit: ShellyS via flickr.com

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        Elena Prokopets

        Elena is a passionate blogger who shares about lifestyle tips on Lifehack.

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        Last Updated on September 2, 2020

        How to Set Financial Goals and Actually Meet Them

        How to Set Financial Goals and Actually Meet Them

        Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

        In this article, we will explore ways to set financial goals and actually meet them with ease.

        4 Steps to Setting Financial Goals

        Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

        1. Be Clear About the Objectives

        Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

        It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

        Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

        2. Keep Goals Realistic

        It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

        It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

        3. Account for Inflation

        Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

        Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

        For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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        4. Short Term Vs Long Term

        Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

        As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

        By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

        How to Achieve Your Financial Goals

        Whenever we talk about chasing any financial goal, it is usually a two-step process:

        • Ensuring healthy savings
        • Making smart investments

        You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

        Ensuring Healthy Savings

        Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

        This is the focal point from where you start your journey of achieving financial goals.

        1. Track Expenses

        The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

        Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

        If you’re not sure where to start when tracking expenses, this article may be able to help.

        2. Pay Yourself First

        Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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        Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

        The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

        Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

        3. Make a Plan and Vow to Stick With It

        Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

        Nowadays, several money management apps can help you do this automatically.

        At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

        Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

        You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

        4. Make Savings a Habit and Not a Goal

        In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

        Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

        • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
        • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
        • If you go shopping, always look out for coupons and see where can you get the best deal.

        The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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        5. Talk About It

        Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

        Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

        6. Maintain a Journal

        For some people, writing helps a great deal in making sure that they achieve what they plan.

        If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

        When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

        Making Smart Investments

        Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

        1. Consult a Financial Advisor

        Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

        Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

        2. Choose Your Investment Instrument Wisely

        Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

        Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

        As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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        3. Compounding Is the Eighth Wonder

        Einstein once remarked about compounding:

        “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

        Use compound interest when setting financial goals

          Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

          Start saving early so that time is on your side to help you bear the fruits of compounding.

          4. Measure, Measure, Measure

          All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

          If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

          Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

          The Bottom Line

          Managing your extra money to achieve your short and long-term financial goals

          and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

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          Featured photo credit: Micheile Henderson via unsplash.com

          Reference

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