How to Cut Down On Some of Your Key Business Costs

calculator-calculation-insurance-finance-53621For many small businesses, the best way to increase profitability is to look for ways to cut expenses. Every dollar you save is another dollar in profits and as long as you maintain quality, efforts toward cost cutting can be an effective way to provide financial relief to your business. 

You might not be able to get rid of many of these expenses altogether, but there is a good chance that you could cut your costs considerably by managing small business expenses more effectively. The following are a few of the major expenses that can impact small businesses and some of the ways they can be reduced.

Rent

Rent is usually one of the biggest expenses for a small business. If you are renting space, you need to make sure the location is serving you well. Think about whether you need all of the space you have. If not, move to a smaller, more affordable location. If your business does not depend on traffic, you could consider moving to a place that is away from busy commercial areas. 

Marketing

If you want to get more leads, attract new customers and build brand recognition, you are going to have to pay for marketing. With that said, you might be able to find ways to save money on marketing. Try to focus on the marketing channels that offer the best ROI. Investigate the types of marketing that offer a good return in your industry or talk to local business owners to find out what works well for them.

Equipment 

Depending on your business, you might need all sorts of equipment. If you are looking at an expensive piece of equipment, you might want to consider buying it used. As long as the used equipment is in good condition, it can be a way to save a lot of money on an otherwise expensive purchase.

You should also invest in preventative maintenance for any expensive equipment you have. The maintenance might cost money over time, but it can extend the life of the equipment and help you avoid expensive repairs.

Utilities

Utilities can be another major cost for some businesses. You have to cover costs like electricity, water, internet, phones and gas. One way to cut these costs is to set rules around how some of these utilities are used. Make sure resources like electricity and water are not being used wastefully. You could also consider buying more efficient appliances and equipment. Some of these pieces might cost more upfront, but they could save your business money over time.

Employee Compensation

Labor is the highest cost for many businesses. You definitely want to have a good team of employees around you, but you also want to make sure you are not spending too much on labor. Evaluate your payroll to make sure you really need all of the employees you have. In some cases, you might only need a part-time employee where you currently have a full-time worker. Making some of these adjustments can make a huge difference for your company’s bottom line.

As another option, you could also consider hiring a virtual assistant to handle some of the work that would go to one of your employees. This is usually more affordable than keeping an employee on the payroll and virtual assistants can help with a wide range of tasks.

Take the time to look at every expense to see if there is a way you could cut costs. You might not be able to find huge savings on everything, but every dollar counts when you are running a small business.

Being Wise with Your Windfall: Tips for Using Your Tax Refund

coins-currency-investment-insuranceIf you’re expecting a hefty tax refund this year, you may, like many people, intend to have some fun with your windfall. After all, it’s your money and you worked hard for it. There’s nothing wrong with heading out for some much-needed vacation time or buying a big gas grill for those summer cookouts. As tempting as that may sound, before you buy anything, consider the benefits of using a tax refund to better your financial situation.

Savings

If you’re among the many Americans who lack a rainy-day fund, think about setting all or part of your refund aside in an interest-bearing savings account. You never know when the transmission in your car may give out or an aging roof might start to leak. These are costly repairs, and the average American is unprepared for them; in fact, just 39 percent of Americans are capable of covering an emergency costing $1,000 or more. If you lack at least three months worth of emergency savings, that tax refund may serve you better as an emergency financial reserve.

If your roof could use some work, repairing it is an excellent use for a tax refund. You’ll head off more serious problems resulting from neglect somewhere down the line. But be diligent in looking for a qualified roofing contractor, and ask yourself several questions to determine what, exactly, you need. Check with the Better Business Bureau to make sure your contractor is accredited, and check out the BBB website for complaints or any disputes or scams a company may have been involved in, as well as tips regarding what to look out for.

Pay Down Debt

Debt is a fact of life for most Americans. If you struggle with credit card debt or are behind on the mortgage, your refund can help you out. Paying off debt is a smart move because the high-interest merry-go-round can be very hard to get off when you’re just managing it by paying the minimum every month. That can take you years to pay off even a moderate amount.

College Savings

According to CNN Money, most Americans can expect to pay about $57,000 for a degree at a public college, and more than $100,000 at a private institution. That’s a lot of money for anyone. Why not use your refund to open a 529 or Coverdell education savings account? And investing in your state’s 529 plan may result in a nice state income tax deduction. However, beware of using the money for unqualified purposes, which can earn you a 10 percent penalty.

Roth IRA

A Roth IRA lets you stash money away that becomes tax-free after age 59.5 as long as it’s been open for at least five years. You can contribute to it as you wish and withdraw the sum of your contributions without being hit with a tax or penalty. Your Roth earnings can be used tax-free for education expenses or for a first-time home purchase.

Invest in Yourself

You are your own most valuable resource, your best hope for earning and growing your assets. Improve your ability to do that by investing in training, additional education, or by joining a professional association. It’s a good way to sharpen your skill set, pick up new knowledge, and make valuable new professional connections. The more you can improve yourself, the more valuable you’ll be to an employer or to clients.

Travel

Speaking of self-improvement, are you aware that travel broadens perspective and helps you keep problems, challenges, failures, and successes in their proper context? Think about spending a portion of your refund to go someplace new, a destination that’s always interested you.

Think of a tax refund as an opportunity, an annual chance to improve your financial situation and personal prospects. Think carefully before heading off to the Jacuzzi store or ordering a season football ticket package. By being strategic with your financial prospects, you can put yourself in a much better position to acquire those “toys” you really want and achieve financial security.