The Coronavirus is scary. People are getting sick, events are being canceled, we are asked to stay in our homes whenever possible, and businesses around us are temporarily closing doors. Social distancing is a smart tactic when it comes to minimizing the spread of this virus. “Flattening the curve” by staying away makes sense for the greater good. Unfortunately, that means that small businesses might take biggest hit.
If you are not already feeling the pinch of social distancing, there is a good chance you will in the coming days, weeks, or months. I am not saying this to increase fear but rather give you the motivation to think about your business and ways to ensure you can keep it alive should things get worse.
Below are 6 ways to help minimize some of the expenses of your business and ensure you maximize the profit and lifespan of the company you love.
Eliminate Excess Spending
What are your non-negotiable expenses? For most companies rent, phone, internet, and energy are essential business expenses. There may be a few more items on the list that are a necessity for your business in particular, but those are the four bills you must pay.
Outside of those, do what you can to spend little to nothing on other items. To cut costs you have to examine every purchase with a magnifying glass. Think, “do we really need another box of pens?” Buy what you need, when you need it, at the best price available. It is time to go back on a bootstrap budget.
Cut Printing Costs
Did you know printing cost tends to be the 3rd biggest budget item for most businesses. Up to 3% of a business’ yearly revenue is spent on printing. To put that into perspective, if your company made $200,000 in 2019 then you spent roughly $500/month on printing alone.
You would think with all the technology we have at our fingertips we would be using paper less, however, paper usage in business is up 20%. Now is the right time to cut unnecessary costs and go paperless.
Minimize Travel
Did you know that small business professionals travel more frequently and spend more on average in travel than those professionals associated with large businesses? Did you know the average professional who travels for business goes on one trip per month?
According to Executive Travel, the average cost of meals, cars, and hotels for each day of a business trip is $325. That is not even including the $450 expense if you choose to fly. Couple that with the fact that each business trip lasts an average of 3 days and you have a total expense per business trip of $1425.
I get it, travel can be a fun part of the job. Some may even say a perk. However, that is an expense that just might not be necessary. If you find yourself in a position to cut some costs, look to hold virtual meetings with cross country (even cross town) colleagues and clients. Find ways to explore other lines of communication aside from face to face visits until you can work travel back into the budget.
Explore Lower Phone Plans (and other monthly service bills)
Smartphones are more a part of business today than they ever have been. Whether you use it for social media marketing, social platform advertisement, email, or payment processing, smartphones are a part of your business. However, there is still room to cut some costs.
Call your provider and ask them to do a rate plan analysis. Plans are always changing and there may be a better one out there for your business needs. Have them look at your data usage to see if you can dial back your plan. Ask about autopay and paperless discounts. These can save up to $10/line on the account.
Then take things a step further. Give a call to all of your monthly providers and see where you might be able to trim down your bills.
Sublet Extra Space
Do you have an extra room in the building or space you rent/lease? Put out an ad to sublet any unused (or unnecessarily used) room you may have in your space. Figure out the square footage of the room compared to the square footage of your entire space and charge the portion of the rent to the subletting individual.
Pro Tip: Be specific with your ad in regards to the professions you are seeking to sublet to. Make sure that it is a profession in a complementary industry to your own. This could lead to cross referrals and an overall mutually beneficial relationship for each of you.
Before I get to the sixth and final bit of advice, I encourage this as a last resort. Times may become difficult but we should always consider the wellbeing of our fellow humans to the greatest extent of our circumstances.
6. Reduce Employee Hours
This one sucks. I am not going to sugar coat anything. As a small business owner, your employees become family members. You put a lot of time, energy, and care into those you employ and see daily. Bottom line is that as a business owner, you may also have to make some tough calls in order to secure your livelihood and ensure your business stays alive.
Take a good look at the real needs of the business. Did you know 32-40 hours per week is considered full time? Maybe it’s time to drop people from 40 to 32 hours. At $12/hour, that leap alone could save your payroll expense $416/month/employee. Maybe you only need a part time associate with 25 hours. Now you are looking at $780/month in payroll savings.
Some difficult decisions may be ahead. I truly hope you do not have to make any that are too tough. Whether you are feeling the sting or not, starting today, put your business on a bootstrap budget. Only put money into items that are 100% necessary to operate. Cut printing and travel out of the budget and find creative ways to lower your expenses (like subletting that extra office space). There are other ways to cut costs, no amount is too big or too small. The sooner you lessen the money leaving your business bank account, the longer the money inside it will last.