Every new business owner has one major goal to achieve – keeping their business costs low to ensure profitability and long-term sustainability.
In other words, being a successful manager of a small or mid-sized business doesn’t only require proficiency in core professional skills.
The key thing is to learn how to harness your expenditure while ensuring steady and reasonable cash flow.
In the next few paragraphs, we’ll share some practical budgeting tips that should help new SMBs pave their way towards cost-effective business management.
1) Revise the office costs
Every business owner needs to deal with overhead expenses. The office rent, the electricity bill, cooling/heating, and Internet costs are something that all entrepreneurs have in common.
And while those obligations are inevitable, the amount you’ll have to pay may vary significantly from business to business. If you manage to keep them low, you’ll avoid some financial hiccups that many small businesses face.
Let’s start with the office rent. Before you select your new office, shop around a bit. Go and visit several places to compare the price-value ratio. A rule of thumb is that office spaces near the town center or within business, areas are more expensive. As opposed to that, you may rent an office space in another location at a lower price. Still, choose a place close to a metro station or other means of public transportation so your workers can get to work and back home relatively quickly.
The same goes for Internet costs – choose the package that will ensure a stable and fast Internet connection, but don’t pay for things for unnecessary features. For instance, you probably don’t need TV-channels in your office.
2) Go for shorter workweeks
Introducing a shorter workweek is one of the common ways to reduce your overall business costs.
Depending on the number of employees and type of your business projects, there are several models of this work organization.
You may want to let your workers have a long weekend. In that case, you can stop working either on Friday or on Monday. Even though a free Friday is a more common option, think about a free Monday, as well.
Some workers might prefer using this benefit in the middle of the week, e.g. on Wednesday. If the office is open all five days of the week, it’s all the same to you. However, if you want to close the office on that free day, then all your employees will have to take the same day off.
Another option is to reduce the work hours within one day. Instead of working full eight hours, you can go for a 6-hour workday. If your business projects and organization won’t suffer because of this, your employees will embrace a 6-hour workday.
3) Encourage remote work
Every employer is obliged to cover their employees’ travel expenses. In addition to the aforementioned overhead costs and together with taxes and retirement plans, it amounts to a significant amount of money every month.
Hence, encouraging your employees to occasionally work from home is a wise thing to do.
On the one hand, they’ll be happy with a solution in which they don’t have to get up early and go to work. Working from home may significantly increase employees’ productivity, especially at the beginning of such work organization. Still, if they only work from home, other variables enter the efficiency formula. An average worker gives his/her best when they can combine working from office and remote work.
In terms of weather conditions, allow your workers to work remotely during heat waves in summer and bad weather in winter. The fact that they don’t have to hassle with commuting under such weather conditions will result in the feeling of gratefulness and increased employees’ loyalty to your business.
And your benefits will be lower overhead and travel expenses.
4) Create a savings plan
Being frugal doesn’t go well if you don’t have a plan. In this particular case, we’re talking about a savings plan.
The old business adage says that a business owner needs to have a cushion fund that would allow him/her to survive for six months without an income.
Therefore, start putting one part of your revenues aside from day one. Since this amount will vary, due to unstable revenues in the beginning, it’s better to set a certain percentage you’ll save from every payment you receive. For instance, 10% would be a reasonable percentage.
As you keep putting some assets aside, your savings fund will grow. But if you start chipping it every time when you lack money, you’ll quickly splurge that money. Because of that, this fund generated by savings should be kept on a separate bank account.
Having monetary reserves will give you a feeling of security and it will also give you more freedom in making your business decisions.
5) Use affordable marketing solutions
SMB-marketing is getting so diverse that many business owners are not sure what options to go for.
On the one hand, you have social media and online ads.
On the other hand, there are various digital channels that can help you spread the word about your business to a large number of people.
For starters, every SMB should have a website. As they explain it at a Houston web design company, a business website is your online showroom. This is the place where you can show what your business brings to the world. Also, it will be the main hub of all your online activities, from presenting case studies of your previous projects to providing links to other marketing channels, such as social networks, YouTube, etc.
As for YouTube, think about sharing tutorials, tips, and your experiences in short videos via this streaming service.
In addition to that, adding explainer videos to your website and stories to your social media pages will target a wider range of online audiences.
And the best thing is that all these options can be used completely for free.
Ensuring steady revenues and keeping costs low sounds simple, but this formula at the same time contains the essence of business wisdom. If it were so simple, no small business would ever fail. So, you must keep an eye on your business budget all the time and harness your costs 24/7. In case of difficulties, react at once to ensure constant cash flow. By applying the budgeting tips from this article and strict self-discipline, you’ll learn how to maintain an ample business budget over the course of time.
Author Byline: Liam Collins is a tech pundit and Web enthusiast working at TuiSpace.com. He spends most of his time reading and writing about the current affairs in the world of information technology. When he isn’t working, he likes going for long bike rides and walks in nature.