Small companies are more susceptible to failure during the first years of activity, and it is necessary to keep costs under control so that they are not the executioner …
Statistics show that only 56% of new ventures reach the fifth year of operations.
Also, the reason 82% of small businesses fail is primarily due to problems with cash flow.
It should not be forgotten that the great challenge for small companies is to continue to maintain optimal customer acquisition and increase turnover, while reducing operating expenses as much as possible in order to emerge and consolidate over time.
These are 4 surefire ways to lower those operating costs.
Evaluate the possibility of moving to a cheaper city
If your venture is an online business, you should study moving to a city or even country in order to reduce your personal and operational expenses.
Before moving, check that the chosen place offers a stable and efficient internet connection service to continue carrying out your work smoothly in your new destination.
Use the free versions of all paid tools
Sure, many are already following this advice, but it never hurts to reiterate it. Online tools are the gear of your business, since you need them for everything. From attracting a new customer to the payment procedure, there is an online tool for every function you need to perform.
Take advantage of all the configurations offered by the tools you normally use, in their free versions. These are the tools that entrepreneurs commonly use and that are very complete in their free version:
- Trello : tool to manage Kanban-style projects.
- Slack : platform that allows file sharing and messaging in real time.
- Wave : support software for accounting and billing activities.
- Unsplash – This is a collection of free stock photos.
- BuzzSumo : platform to create content strategies.
- Clockify : tool to keep track of productivity.
- Canva : software to create designs for social networks and blogs.
Although you think that some of its payment functions are necessary for your business, in most cases they are not. Do not be tempted to become a Premium user for a need that is not real, for comfort or for an irresistible offer. You should do without all the Premium features at all costs and look for free alternatives, even if they are not as complete.
Review and reduce your expenses
This step is the most important of all and you shouldn’t skip it. Take some time at the beginning and end of the month to review all your bills and expense receipts. Include them in a monthly Excel, where you can see the variation of these expenses from month to month and at the same time you can choose which expenses you are going to reduce or dispense definitively.
All those expenses that do not contribute substantially to making your business grow will have to disappear. With a part of what you save each month, open an emergency fund, which you should only have available during times of crisis.
Outsourcing, far from being a hole in your box, can represent an opportunity to diversify your income and open up new businesses. If you know one or more professionals who can efficiently perform some specific tasks of a project that they are offering you, accept it and subcontract.
If you choose your outsourcing well, your clients will be more than satisfied. Ultimately, this will translate into recurring work for your business. Tools like Fiverr are a great ally to choose permanent and temporary employees.
By following these tips, you will be able to rationalize your costs to increase your income in a safe and sustained way. Over time, the new slack in cash flow will allow you to make significant investments to grow your business.