Saving Money: 15 Tips On How To Save Money In Business

Written by Johanna / November 17, 2009

The hard hits our economy has taken over the past two years have left many businesses looking for ways to cut costs and save money without cutting employees. In this article, I’m going to introduce you to 15 ideas that will save your business money despite the downturn in the economy. The following steps are simple, yet effective, and most are applicable to both businesses and individuals.

1. Renegotiate Contracts

Many vendors will agree to reduce your contract rates especially if you dictate to them that another vendor has offered you a better rate. Below are some specific types of contracts you might be able to renegotiate:

Telephone – I know of someone that was paying $500 on his cell phone alone per month. I urged this individual to renegotiate his contract. I have also renegotiated our business services and saved $2,000 per year on long-distance and regular business services.

Mortgage- With mortgage rates not able to retreat further than low tide now is the time to refinance with a lower rate. Make sure to check that the penalty for ending the higher rate mortgage is not more than the interest rate savings over the term of the mortgage.

2. Credit Card Terms

An unpaid balance on your credit card is like a disease that devours your disposable income. If you must carry a balance, look into other lower-rate cards. You can also request a credit on your annual fees on the basis that another company is offering you a lower fee.

3. Bank Charges

Switch to a checking account with no or minimal bank charges. These charges can carve away anywhere from $20 to $100 per month of your well-deserved wages.

4. Time Your Payments

Set up all your payments to be automatically paid by pre-authorized payments on your credit card or directly from your bank account. This will ensure that you will earn interest on the amounts for the maximum time and that you will not be charged late fees. The benefit of paying bills with your credit card is that you will only have one lump-sum payment against your bank account, which makes it easier to manage cash flow.

5. Property Taxes

Set out to your local city hall to find out what other businesses are paying in property taxes. If your business is new in the area, chances are that you are assessed higher rates than existing companies. If your company is projected to grow you can negotiate lower rates because you will create jobs for the local economy.

6. Become Energy Efficient

When it is time to purchase replacements search out energy efficient devices, order energy efficient lights and other electronic devices. Each item will reduce monthly energy costs which translates to savings over the lifespan of the device.

Also, turn off unused appliances and lights when they are not in use and definitely at the end of the day. It may seem like a small step, but it adds up.

7. Pay Off Higher Interest Rate Debts First

Pay attention to the interest rate you are paying on each type of debt. Get rid of the higher rate debt first since interest savings will put more money in your pocket. For example, a person with credit card debt of $2,000 with 30% interest and a line of credit for $5,000 with a rate of 10% would save $200 for every $1,000 of higher rate debt that they pay off.

8. Advertise Online

Online adverting costs less than traditional advertising. There are no printing, paper, or mailing costs associated with online ads. Also, it is a more efficient way to advertise since you can track how many customers clicked on your ad, how many purchased a product, and what they purchased. It is also possible to change an ad easily and do comparisons to see which ad is more effective.

Online advertising isn’t just limited to buying ads, however. Does your company have a website? What image does your website convey? How effective is it in displaying the right information about your company? A website is your public calling card to the world and it never sleeps. Properly built and maintained, a good business website will cost less and deliver more in the long run than other forms of advertising. Did we mention we design business websites?

9. Get Multiple Quotes

Most would find golfing or sailing more pleasurable than getting quotes, but you should get multiple quotes on everything you purchase. These quotes are a crucial part in determining that you get the best price and value for your money. If you can buy a product for $1,200 that lasts 5 years or another that is cheaper for $1,000 but only lasts 1 year you are saving money by spending $1,200 now and $0 for the next 5 years.

10. Buy Used

Recycled printer cartridges and used office furniture are only a few of the things that you can buy secondhand. Recycled cartridges cost 50 - 75% less than new cartridges but they offer the same function. It is also better on the environment to reuse the plastic. Recycled or second-hand office furniture is about 60% less than retail prices but can be just as stylish. This can add up to a substantial amount of money.

11. Use Open Source Software

If you’re balking at the high licensing fees that purchasing business software usually entails, look into open source software. Chances are, there is an open source project in your area of need. Here are some of the common ones:

Microsoft Office Alternative - Try Open Office or Google Docs.
Customer Relationship Management (CRM) Systems - Check out SugarCRM.
Content Management Systems (CMS) – Try Joomla or Wordpress.
Photoshop Alternatives – GIMP or Inkscape

12. Book Travel Online

If you’re booking flights, hotels, or car rentals, checking the online travel websites may save your company more money than working with a travel agent, even if you have negotiated a lower rate for frequent travel.

Below are just a few of the more popular travel websites:

An additional point to add here is to get business credit cards that accrue air miles and then redeem them for free fares. Many individual airlines will also let you track your miles. Frequent use of the credit card or frequent travelers will be able to redeem multiple flights per year.

13. Use Skype

If your company deals with a lot of international phone calls, consider using Skype, an internet-based telephone service. Telephone calls through Skype are generally cheaper than almost any other plan you will find and the quality isn’t bad either. Skype-to-Skype calls are free while calls to landlines or cell phones are low cost. Monthly plans are available and you can even buy regular phones that connect to your computer.

Another service to keep an eye on is Google Voice. It’s in a limited beta version right now, but it looks like it’s going to be a serious player very soon.

14. Allow Workers To Telecommute

If your business is setup in a way that allows your workers to telecommute and if your workers are able to be productive from home, allow them to telecommute a few days per week. It will reduce office overhead for your business and it will help your workers save money on gas and other vehicle expenses.

15. Hire An Accountant

If you’re a smaller business or even an individual, this is one step that will pay for itself. If you’re not working with an accountant, you’re probably losing money in one way or another. A good accountant will help you navigate tax issues that you might not know exist and will keep you advised of potential pitfalls in your finances.

The Last Word

Employing even a few of these 15 items will help your business put away money a few coins or stacks at a time. The main principle to follow is to be cost-conscious in everything you do. Don’t overspend, don’t get into debt, and look for ways to save money at every step. However, don’t just go for cheap – look at the big picture and calculate the cost over the long haul.

If you have more cost-saving tips for businesses, contact us and we’ll include them in a future article.

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