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4 Places Small Businesses Can Cut Costs

Posted March 28, 2013 by Joe Pawlikowski to Small Business / Entrepreneurship 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

Not all frugal small businesses will succeed, but small businesses that neglect frugality will certainly fail. Without a large cash surplus, small businesses have to mind every expenditure so they don't overextend themselves. One misstep can create a cascade that leads to a business's downfall.

Whether it's a one-person startup or an operation with dozens of employees, there are ways for any small business to save money without sacrificing quality. It means a little bargain hunting, of course, combined with superb negotiation skills. Take a look at these four areas and see if your small business can save money with them.

1. Web sever space

Every small business needs a website. Whether it's a web presence for a brick-and-mortar operation, or a web-based business, this is one unavoidable cost for all small businesses. Yet the reality is that most people pay too much for hosting. The world of IT remains a mystery to the lay person, and that can lead them to think they need more than they do -- or worse, paying too much for a service they could get more cheaply elsewhere.

Most small businesses can get by with something like Amazon Web Services. They provide a cloud-based solution that charges users based on how much they use. It certainly represents a cost-effective alternative to traditional hosting. There is also the option to go with a local provider. These can often provide better deals than big-name hosts.

2. Payment fees

When pricing products, small businesses have many -- almost too many -- factors to consider. It might not seem as though small businesses have large overheads, but it really comes into focus when pricing products. One factor that plays a significant factor: payment fees. Whenever you take a payment online, you provide a part of that sale to the company that processes your credit card transactions. It's one more place to mark up a product.

It is crucial, then, to shop around for the best credit card processing fees. A company like Intuit rolls many services into its payments program, so you can take advantage and find additional value. Going with a one-product provider, such as PayPal, might not work out well. They charge comparable fees, but don't provide many, if any, services on top of payment processing.

3. Office supplies

In the past, skimping on office supplies would have dire consequences. Employees would be literally at a standstill unless they had pencils, pens, paper, staplers, and other office accoutrements. Some companies believe these office supplies are still necessary. Open up their supplies cabinet and you'll see huge quantities of pens, highlighters, pads, printer paper, post-it notes, and more.

In our digital world, the need for these physical supplies is lessened significantly. Perhaps some employees prefer working with pads and pens, but that doesn't obligate a business to supply them. Note-taking tools like Evernote, or even collaborative tools like Trello, can provide facsimiles for almost all office products. The fewer physical products you need and can replace with free web services, the more you stand to save.

4. Hire remote employees

This gets into a tough area. There are many advantages to having in-house employees, especially for companies that deal with creative enterprises. But at some point you'll need to expand beyond your current office space. Beyond that, the cost of hiring new employees is high. Going with freelance, remote workers is one way to save on personnel costs -- and there are ancillary benefits to go with it.

This video on One Minute MBA lays out the benefits of hiring remote workers. They are in many was more difficult to manage, but they bring many advantages that outweigh that downside. They cost less, since they don't eat up benefits packages. They're also typically happier than office workers, as evidenced by the lack of turnover. And if there's one killer personnel cost, it's turnover.

Where not to skimp: People

While small businesses can find plenty of places to save, the one area they should never sacrifice is with people. Finding the right people and paying them a fair wage can be the most crucial undertaking for a small business.

This might seem to fly in the face of No. 4, since hiring remote workers is about saving on personnel costs. But that's merely finding an inefficiency in the market. The actual people you hire remains of the utmost importance. Of course, if a position comes down to a promising in-house worker and a mediocre remote employee, it should go to the in-house candidate. Skimp on personnel costs at your own peril.

About Joe Pawlikowski: Joe Pawlikowski is a small business owner and employee. He manages many employees, both in-house and remote. At his personal blog, A New Level, he covers many issues relating to small business. 

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