I had the chance of working with some amazing companies like General Electric, Dell Computers and American Express at the start of my corporate career.
I was always fascinated with how different teams and functions worked tirelessly to achieve their specific goals but also the overarching goal of the company.
If there was one common focus area in all these companies apart from fostering growth through innovation and constant process improvements, it was keeping costs to an absolute low.
I learnt that by keeping a hawk’s eye on where the business spent its money these companies came out stronger even through one of the worst recessions in modern history.
This constant focus on keeping costs low stayed with me even after leaving the corporate world and when we started our business in 2011 keeping costs low was crucial.
However, it’s important to distinguish between NOT spending on your business where necessary and making sure that you DON’T spend even a dollar extra than you need to.
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Here are 7 Proven Ways to Save Money on Expenses and Grow Your Business and Profits to the Maximum
1. Pick Tools That Multitask
Whenever we feel the need to buy/subscribe for a tool that would save us time or help with a specific task we always lean towards the one that multitasks.
We use WooCommerce and Teachable to sell our digital products.
For example, Teachable not only provides an optimized purchase experience for the buyer but also takes care of any refund requests, automatically calculates and sends payment to our affiliates along with the flexibility of setting up subscriptions, selling physical goods, access to detailed analytics and much more.
We pay $39 every month for this service and don’t need another tool to run our affiliate program or spend time in processing refunds, if any.
2. Focus on the Business Need and Not the “Great” Deal
We all look for great deals whether it’s for a fancy handbag or a pair of leather boots. Sometimes, you can get sucked into buying stuff that seems like a great deal but you probably don’t need.
We make a list of tools, services/service providers like a Virtual Assistant or a web designer and allocate our budget only to spend on the ones we need.
Same is true for eCourses, we’ve taken some amazing online courses in the last few years and have learnt new skills along the way.
However, we do not buy a new course till the previous one is done and dusted, both in the form of learning and implementing from it. Research shows that only 3% of people who sign up for an online course actually finish and apply learnings from it.
I’m sure a lot of that happens with monthly subscriptions for tools or a mastermind that doesn’t get used much. As entrepreneurs there is so much going on in our lives that sometimes these things just slip.
Reviewing your current needs is key to not invest in too many different directions.
3. Think Independent Contractors and not Full Time Employees
We prefer to hire independent contractors on a project basis for tasks which we don’t need done every week. We have an Editor, a Graphic Designer and a Virtual assistant on our team but apart from that we only look at Independent Contractors.
They help reduce costs drastically since you don’t have to pay any benefits or worry about permits/licenses. They specialize in a particular service and don’t need any training and are needed only on a project basis.
4. Affiliate Programs
A lot of good businesses have affiliate programs as a marketing strategy and to generate qualified leads.
What is the first thing you do when you want to buy a product or service online? You look for reviews or ask your friends about their experience with that product/service.
We share our experience about products and services that we have used, which might benefit other business owners and if they sign up via our affiliate link we make a commission.
For instance, we love ConvertKit for automation and email marketing and since we are comfortable recommending the service due to its excellent customer service and flexible features we have a lot of people signing up for it every month. This means that we make back the monthly subscription fees that we pay to ConvertKit in the form of affiliate commissions, hence keeping our costs low.
5. Manage Subscriptions Smartly
As a business owner you are normally subscribed to a host of tools and services.
The key is to distinguish between the ones that you absolutely need month on month and some that are only required occasionally.
We often upgrade to a paid plan of a tool when we need it during product launches and then move back to the free plan when we won’t be using all of its features.
6. Pay More to Save More
Yes, it might seem weird but you can actually save by paying more.
There are a few services like Dropbox for which we pay annually and hence pay more that particular month but save 10-20% on its cost for the year. If there is a tool or a service that you have been using and are happy with, consider paying it for the whole year and cut down your expenses.
7. Budget and Track
What gets measured gets done!
It’s critical to budget for business expenses at the start of the year looking at previous year’s data, especially if you’ve been in business for a while and then break it down to a monthly budget.
If you aren’t already doing it, then you can start now by just downloading the plug-and-play Income and Expenses Calculator and Tracker to start tracking your expenses every month.
You might not meet your monthly budget every single time but after 3 or 6 months if you feel you’ve been spending more than what you budgeted for then you can always cut back for the rest of the months to stick to your target.
Remember, how much you spend on your business can vary dramatically. It depends a lot on the nature of the business, the current stage of the business, the Industry, Growth plans and also your own skills.
If you want to grow your business quickly you can either put in more hours or more money.
Similarly, if you can invest more time in your business then you might be able to do away with an assistant or at least need them for fewer hours. Same is true if you bring multiple skills to the table for which you don’t have to hire out. Start by evaluating the “must haves” for your business and see if the number that works for you is 10% or 20%.
How much do you spend on YOUR business expenses as a percentage of your income every month?