Business expenses and outgoings can eat into your profits and in some cases you can end up spending more money than you make. As such, it is a good idea to do everything you can to keep costs down and maximize profits. Here are a few ways you can do this even as a new business.
1. Always shop around
Whether you are buying equipment or products to sell at profit it is important to try and get the best deal available. Can you buy any of the equipment you need refurbished or used? All kinds of items can be bought on selling sites like Ebay and Craigslist and there are several companies that sell used business and repossessed equipment online. Be discerning if you are buying electrical equipment though and try and get items that have a warranty.
2. Do you need premises?
Business premises can be an expensive and often unnecessary overhead. If you have an office or warehouse you will have to pay for rent, utilities, security and insurance. Furthermore, you will also be responsible for health and safety and any other industry related costs. Having premises is often more trouble than it is worth so before you sign leases weigh up all the other options. Many self-employed people now work from home or simply set up a website and get suppliers to deliver directly. If you are offering a service is there any other way you could liaise with clients? Offering to visit them at their workplace could save them travelling time and save you having to splash out on premises. If you offer classes of some sort it might be cheaper to rent a function room as and when required rather than an entire building which isn’t always open.
3. Don’t hire employees if you don’t need them
Staff expenditure can be very costly. Once you take people on you will have to give them a package that includes holidays, reasonable wages, benefits and you might find some weeks you need them less than others. The internet and modern working hours have changed the way employees operate. Many small companies now use freelancers to cover their work. If you only need work doing occasionally, it can be more cost effective and for workers who like a variation in their working hours and jobs, it can be ideal. Before you make a decision, consider how much work you would need doing on a weekly/ monthly basis, look at current freelance rates and then what it would cost you to pay a permanent member of staff including benefits and holidays.
4. Assess your taxes
Tax is an essential expense for any business. However, some businesses miss out on tax rebates and benefits because they are not aware or have only just started out. There are numerous tax incentives and benefits available for businesses and as the rules vary from state to state and depending on the nature of your company, it is worth keeping in touch with relevant associations and organisations in your industry. The IRS website is a good place to start but if you have any doubts or queries, contact an attorney.