All businesses are unique in every sense of the word, but all of them have an underlying factor which they gamble with, How to minimize their cost and maximize their bottom line, be they startups, small businesses or large businesses. The purpose of any business is to make a profit, right? And profit is generally achieved by subtracting expenses from the acquired revenue, all other factors held constant. So the big question then becomes, How do we minimize our expenses?
Small businesses are constantly being chocked by increasing expenses, such as increasing fuel costs, increased suppliers cost, payroll expenses e.t.c, therefore, minimizing these costs could really maximize results in the long-run. Any corporate that uses the invoice payment method knows just how it feels when these invoices go unpaid for months on end hence, adding overhead expenses without any compensating revenue could really be harmful to the business.
The following are ways for minimizing costs and hence maximizing results.
Lowering office costs
It is advisable for any startup or small business to consider looking for office space in an area where real estate isn't expensive, In Kenya, one such place is "The Industrial Area" in Nairobi. It is a good place to check out some office spaces which are cheap and located in a conducive business environment.
Business owners could also talk to their landlords to better their lease terms or better yet if the business doesn't really need an elaborate office space why not try an at-home office, this saves a lot of expenses on; insurance, taxes, and utilities. With time as the businesses, the bottom line increases one can look for a corporate office space. The main thing is, not to strain your business if it is not at the financial standing to pay for an office space.
Cut vehicle expenses
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If your business is a large consumer of cars, then it is advisable to buy brand new cars! I know you are probably wondering isn't buying a brand new car expensive? Buying a brand new car compared to a used car is expensive in the short-run no doubt about that, but in the log-run buying a second-hand car can prove to be very expensive because of maintenance and servicing fees.
If you have a problem with racking up on mileage, then it is advisable to buy cars that consume a little fuel preferably buy diesel and hybrid vehicles which again are expensive to buy but cheap in the long-run as they save on fuel and maintenance cost.
If your business doesn't necessarily require a car, as a producing asset then it is only wise to not purchase one until your business's bottom line increases. You can always hop on a uber which is not only cheap but efficient since you will not have to worry about fuel consumption or traffic police.
They say a car is a liability because when you purchase a new car it loses 20% of its value when it leaves the showroom, so if your revenue can't comfortably support all the expenses that come with owning a car then there is no point of buying a car.
Cutting the cost from suppliers
No business can survive without its suppliers, however, the businesses don't have to be crippled from spending thousands and thousands of shillings buying expensive supplies. One way to cut supplier's cost is buying on wholesale and in bulk, this leads to discount allowance.
Another way is by maintaining a personal relationship with the suppliers this way, it is easier to negotiate with the suppliers and get discounted prices every time you purchase from them. Always look for new and cheaper suppliers in the market and make good relations with them to enjoy the benefits.
Minimize advertising costs
Current studies are showing that small businesses are using 5% of their revenue for advertising. This can go up for margin oriented businesses or start-ups. Some businesses use very expensive methods for advertising while there are very cheap ways of advertising out here! One such cheaper advertising method is creating an online presence. This can really revolutionize your business's marketing strategies. Start by creating a simple business website and/or create a facebook page or an Instagram page or tweet about your business on Twitter, and create an email newsletter. Some other very cheap ways are cold calling and asking for referrals and always carrying your business card to give prospected clients.
Look for a way to cut on your taxes
Honestly speaking, taxes place a very huge burden on businesses, but in order to continue being good citizens, it is only wise to pay taxes. How then do we minimize the tax bill in order to maximize the businesses results?
One way is to ensure you maximize all your deductions and make sure all the expenses are well entered as a deduction on your tax return.
Also, keep all your savings receipts, preferably file them upon their receipt, record all your vehicle mileage when traveling for any business purposes.
There are many other ways we can think of to minimize our business's costs in to maximize its results however, this is an action-based solution, you'll have to take a close look at your business and do a proper audit, find out which costs can actually be cut and ensure that cutting them will not affect day to day running of the business.
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