Types of Expenses: 7 Key Ways to Save Money for Your Business

types of expenses company budgeting how to save business money

Managing company finances can feel like a labyrinthian task. That's why it's sometimes a good idea to get back to the fundamentals. For example, the more your company saves, the more your company makes.

Simple, right?

But cutting costs isn't always that easy. Every company has to navigate different types of expenses to save money for your business. 

Where can you save money, and where should you leave things as they are?

You're ready to save money for your business. And we're ready to help you. Read on and discover 7 surefire ways to cut company costs and improve your bottom line.


1. Use Low-Cost Advertising Methods

Traditional advertising is expensive. Whether you're running a PPC campaign or buying space in relevant magazines, the costs add up quickly. The truth is most small businesses can't afford the level of advertising necessary to see worthwhile results.

That's why many are turning to more cost-effective advertising solutions. If you rely on your website to convert customers, then turn your attention to search engine optimization. By improving your site's ranking, you'll get more eyes on your business and thus more customers.

Even brick-and-mortar locations can benefit from inbound marketing, such as creating informative articles and YouTube videos.


2. Reduce Your Job Requirements

Experienced workers expect larger salaries. And that experience doesn't always translate into additional profits for your company. When you're filling a vacancy in your business, ask yourself if you really need an employee with five years of in-person training.

By hiring recent graduates, for example, you can afford to pay them much less. Although they're lacking in real-world knowledge, they'll have the education they need to fulfill the role. Just be sure you choose candidates who excel at learning on the job.


3. Take Advantage of Free E-Commerce

On the low end, creating an e-commerce website will cost you tens of thousands of dollars. That's an expense that not every small business can afford. And even if it's in the budget, is it really a wise purchase?

Don't disregard e-commerce options that are readily available. Your business can use sites such as eBay, Amazon, and Etsy to curate and distribute sales. Yes, they'll take a little off the top, but you'll still save thousands as you increase sales volume.

If you're really set on owning an e-commerce store, choose to go with a premade solution. These have limited functionality, but your budding business likely won't need the versatility of a custom option. One of the best premade solutions on the market is Shopify


4. Slash Shipping Costs

Turn to the mailroom when you need major cost-cutting strategies. Shipping rates can vary between services and parcel sizes. By shopping around or changing distribution methods, you can effectively lower your overhead.

Negotiating even a small rate change can lead to big savings. Imagine making an extra dollar every time you ship a product. And if you've never audited your mailing network before, you can likely save much more.

USPS postal rates increase every year. Search for cheaper shipping solutions to pass the savings on to your customers or grow your business.


5. Work From Home

The location of your business will have a major impact on your monthly rent. For example, a New York office will cost you an annual $14,800 per employee. But the question is, do you even need an office?

You may not need a physical space depending on your product or service. And if you don't, then why pay for one? Telecommuting is an easy way to keep a low overhead.

Many employees also enjoy the flexibility of working from home. In fact, you may be able to offer a lower salary with this incentive.

When an office space is a necessity for some positions, you can still have the others telecommute. Maybe you need warehouse workers to handle distribution. But does your accountant need the office space?

You can get a smaller office with fewer workers. And that means much lower rates.


6. Cut Unnecessary Types of Expenses

What kind of incentives are you dishing out for your employees? If things are getting tight, it may be time to re-examine that luxury coffee machine in the kitchen. Nobody likes their perks being taken away, but it's better than having to downsize the company and let people go.

And it's not just about incentives. Cut your power bill by hooking all electronics to power strips. At the end of the day, you can turn these off to avoid losing money to standby power.

Anytime you make a payment, ask yourself if the service is necessary. And if it is, ask yourself how you can find ways to cut costs.

Over time, these small changes can lead to big savings.


7. Negotiate Better Rates

Every business works with a variety of vendors, whether they're selling office supplies or product materials. You should know that your rates are never set in stone. One of the best ways to cut company expenses is to head to the negotiation table.

You have more power than you might think. Many vendors are willing to lower their rates. For them, making less money is better than making no money.

Do your research beforehand to see what others are paying. Renegotiating doesn't carry a large risk, but you don't want to insult your vendors with a ridiculous request.


Know When to Save and When to Spend

In general, cutting certain types of expenses is worthwhile. But you can't cut everything. Sometimes you'll profit in the long run by investing in things that truly matter, such as your product, employees, and partners.

It may appear counterintuitive, but employee happiness can lead to increased productivity and retention. By paying more now, you'll get more later.

For more advice for your small business, head to the business category on our Frugal Finance blog. Frugal Finance is crushing company costs worldwide!

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