Do you know that 90% out of the reasons why a business would eventually fail is the lack of the financial capacity to continue running the business?
For a business to be successful, you must know the powerful ways to reduce your business expenses.
It will interest you to know that capital to the layman is just the total amount of money that is used to commence a business, well, capital means many other things.
In businesses, every building, items, equipment etc. are all capital. In fact, in the world of business, there is a capital that must continue to be available to run the business and this is called the Circulating Capital.
The circulating capital is the money that must be spent on the business for the efficient day to day running of the business.
Once the circulating capital is no longer circulating, then the business is sure to wreck so it is important to reduces your business expenses at all cost.
Some businesses flourish in the first year because the starting capital is still there. Once the tasks increases it will be difficult to foot bills and make payments.
I am not asking you to be stingy, but without the proper application of economical tactics to run your business, it may lead to financial breakdown.
As a businessman, you don’t need a financial adviser or manager so to say, because the remuneration of that alone is another expense.
You can be your own financial adviser if you take the powerful ways to reduce your business expenses seriously.
I want you to know that it is not possible to get the tips that directly affect your own line of business.
On the other hand, I have made efforts to assemble those tips that affect every business out there.
Top 10 Powerful Ways To Reduce Your Business Expenses
Here are the top 10 powerful ways to reduce your business expenses
1. Purchase In Bulk And Do Away With Perpetual Payments
These are two different points though but are deliberately combined together because they are interwoven.
Let me use rims of paper for example; when you buy one rim of paper of 80gsm, you are spending ₦2,900 naira to purchase it.
In 4 months, you have used 4 rims of papers which means that you have spent a total of ₦11,600 naira.
However, a carton of paper that has four rims costs ₦10,800 naira only. That is a good opportunity to have saved ₦800 naira.
It is better to buy your office supplies in bulks such as in cartons or dozens than to buy unit quantities.
On the other hand, discounts are usually given by suppliers for bulk purchases and that saves a lot of money.
2. Save Electricity And Invest In Solar
I want to bring to your knowledge that there is no business, no matter how crude, that doesn’t need electricity to operate.
Even farms need huge amount of electrical energy to carry out some productive processes. Electricity supply is the soul of businesses.
That is why it seems that in most African countries, economical productivity is limited by the lack of constant electric supply.
The purchase of petrol or diesel as fuel for generators is a huge cost in the running of the business.
The electricity generator’s is costly and the regular maintenance consumes a lot of money in business.
So, it is important to make use of inverter solar systems that uses natural sunlight to supply electricity.
I want you to note that it saves a whole lot of expenses on generators and constant fuelling.
3. Curtail The Usage Of Electrical Appliances
Now, the use of prepaid meters from the Power Holding Company has come to teach a lot of people the rudiments of managing electrical appliances.
On the other hand, while most people think they are being cautious about the use of electricity, they have only been doing little.
Do you know that you can switch off your AC and lights when you take a break out of your office?
Do you know that you can deliberately refuse to use the AC on days when the environment is not too hot?
Do you know that you don’t have to combine the usage of ACs and electric fans at the same time? Why not save some units on your meter.
Some people are not aware that some electric equipment, devices and appliances save more power than others that is why they are called energy-efficient devices or simply energy savers.
For example, the traditional violet bulb has 60, 100 and 200 watts written on it and they consume more power than energy bulbs.
The energy bulbs are costlier but they consume just 30 to 35 watts of electricity and are energy savers.
Some air conditioners, printers and fans are energy savers. They are costlier than those that do not save energy.
So, it is better to incur the additional cost and acquire the energy savers than the cheaper ones.
In fact, when you are a user of inverter, these appliances save your battery and gives it longer power supply times.
It will interest you to know that they save you a lot of cost, consumes less energy. So, it is one of the powerful ways to reduce expenses in business as an entrepreneur.
4. Acquire Used Equipment In Some Cases
If you want to save your business some expenses you don’t have to buy everything you need as tear-rubber. That’s a penny-wise and a pound foolish.
There are a lot of equipment out there that are super viable and have just been used for a short while before being put out for sale.
Some equipment are even called “tokunbo” in the Nigerian peninsula for example; they are items used abroad but shipped here.
Most of these items are good as new, or even better than some new products. All one needs do is to make sure that they are in good condition before purchase.
Wise businessmen take an expert along in the equipment they want to purchase and make the expert see to it that the equipment is in order before paying for it.
Why buy a new product when the used or second-hand can serve you the same purpose and at a cheaper price.
Items like heavy printers, photocopiers, computer devices, ICT gadgets, projectors and so on, are available out there at second hand rates and are good to use. They reduce business expenses.
5. Employ Multi-Tasking Employees
The business units, companies and firms we have these days do not employ a person only for a single role in the organization.
This is why they hold rigorous interviews, looking for people who have the multi-talent that they require and can handle different tasks in the organization simultaneously.
This is called multitasking because rather than employing three different people for three different roles, it is possible to employ only one person to fill up those gaps.
The employee can be paid a little more than he would have gotten for performing a single task in the office, he will be happy to receive more to carry out other tasks efficiently.
On the other hand, this saves the business the cost of paying three different people salaries monthly.
6. Give Opportunity For Remote Working Of Employees
It will interest you to know that some employers and owners of businesses are very strict when it comes to the presence of their workers in the organization.
The truth is that it is not all functions that need to be performed within the confines of the organization especially in this modern age where the use of sophisticated technology has made communication easy in all ramifications.
When you employ people who prefer to work from home, it saves your business the cost of more transport allowances for the staff.
Apart from that, when all your staff’s are at working place, they make use of a lot of resources of which when they are absent, would not have been used.
Is it not better for John the blogger and graphic designer, to work from home instead of resuming the office every day using the fan and AC for 10 hours? Think about it.
Sometimes, the physical absence of your employees is a blessing than a disappointment as long as their productive activities from wherever they are can’t be hampered.
7. Habituate The Use Of Freelancers And Part-Timers
A worker is a worker as long as he or she carries out his or her duty when needed. Some businessmen find joy in seeing every single worker on seat at all times.
I want to bring to your knowledge that this is not the case for any wise businessman. This is because they employ part timers and freelancers who can take less payment for their work done.
In Nigeria for example, thousands of undergraduates, National Youth Service corps, apprentices and the others are always looking for companies or organizations to attach themselves to as their internship plugs or primary place of assignment.
Some of these do not wish to get a penny for the work they do because it is a pure symbiotic relationship. I admit you here to learn from me and you work for me.
You, as a motivational businessman can decide to pay them stipends for them to be able to work more, they will be grateful and do more.
This is a huge way of saving costs, rather than employing full-timers who will do the same or even less than the interns and part-timers.
8. Use Internet Marketing To Sell Your Business
In our society today, people no longer waste so much on the printing of colourful banners to hang around the communities as means of advertisements.
Some people do not need to pay large amounts to TV stations or radio channels to be able to publicize the organization.
The emergence and use of the social media in collaboration with the internet is now in vogue.
You have your internet devices to connect to the internet, you should use your Facebook, Twitter, Whatsapp statuses and Instagram pages to market your business.
You can decide to create a blog or website for your business and seek traffic for people to see what your organization stands for. This saves much more costs.
9. Record Your Business Transactions
You may be wondering how the recording of transactions would save one some expenses. Well, this deals with the discretional ability of the businessman.
Business records are very good references that pinpoints the direction the business is going and how to control the business even better.
While going through daily records, signals will always be seen on what is coming in and what is or has been going out of the business.
Income and expenditure records of the business are very crucial to keep the precautionary motive of the businessman alive and alert.
If the records can show what are surplus and what are deficit, then it will give a guideline on how to manage the financial aspect of the business.
10. Barter Your Business
In the study of business administration, there is always a study that teaches us about the importance of trade by barter in the olden days.
The thing is that even nowadays, there are a lot of trade by barters going on. There are two businessmen, one is an ICT company and the other is a private oil and gas industry.
Each time the oil and gas company needs the ICT Company to repair, install or maintain any of their gadgets and devices, the ICT company in turn requests for gallons of diesel and petrol for their cars and electrical generators.
Now that is an excellent barter business. No one is spending directly and the expenses are reduced.
It is a win-win situation. Hence, as a great businessman, you can cut your expenses by seeking the indulgence of an organization you wish to acquire service from if they want something that you have to offer.
Don’t be surprised that they will always do and it will beat your imagination how much expenses that you can save.
There is a mantra in the society now that he who has a business is the true holder of power.
A job can earn you millions but when the job is gone, you have lost it. Your ability to reduce your business expenses give you an edge over your competitors.
A business on the other hand can earn you thousands but it will eventually only become hundreds of thousands, millions, billions and it goes that way until it is handed over to your generation to carry on with it.
The thing about business is that it has a tendency to collapse if the managerial aspect of it is watery.
These managerial aspect deals mostly with the financing. Every businessman wishes to maximize profit by spending less and gaining more and that is the essence of this admonition.
Now ask yourself, are you spending more to gain more or spending less to gain more?
If the former is your choice, then you are not a true businessman, the later should be the choice of a true businessman.