22 May Operating Expenses: 5 Ways for Small Businesses to Save
Even during the best of economic times, small business owners look for ways to save money without sacrificing the quality of their products or services. During these particularly tough economic times, it’s more important than ever for your small business to save money wherever possible. As it turns out, there are a variety of ways to do this, including by reducing operating expenses.
What are operating expenses?
Your operating costs or expenses are those you pay for the day-to-day running of your business. You might also hear of them called OPEX or operating expenditures.
One of the biggest components of your total operating expenses is the cost of goods sold (COGS). That being said, there are a variety of other operating costs that contribute to the total, including:
- Maintenance costs
- Labor costs (including payroll)
- Sales commissions
- Office expenses
- Attorney and legal fees
Now that we’ve covered some of the different types of costs, we’re going to share five ways small businesses can save money on operating expenses.
5 ways small businesses can save on operating expenses
- Utilize technology
- Save on office supplies and furniture
- Focus on being environmentally friendly
- Identify inefficiencies
1. Utilize technology
There are so many useful technology options for small businesses to utilize. Not only can they make your business run smoother, but they also increase efficiency.
And you know what increased efficiency means?
Lower labor costs and more time to spend on the tasks technology can’t handle for you!
Another advantage of embracing technology in your small business is that it can also mean there’s less of an opportunity for human error. Ultimately, this can limit the chances of making mistakes that cost your business money.
Here are a few types of technology your business might consider utilizing to cut operating expenses:
- Website builders (as opposed to hiring a developer)
- Supply chain technology
- E-commerce and inventory management tools like Shopify and BigCommerce.
While you might be tempted to buy the latest and greatest office furniture and supplies, it’s worth shopping around for better deals. With a little work, you can often source out gently used office equipment and supplies that are in good condition and work just as well, at a fraction of the cost.
3. Focus on being environmentally-friendly
Utilities are a big component of most small business operating expenses. There are plenty of quick ways to cut these operating expenses and make your office a greener, more environmentally-friendly company.
- Switch to compact fluorescent lighting
- Reduce waste in your business by going paperless wherever possible
- Save on heating and cooling costs by updating and improving windows and insulation
4. Identify inefficiencies
Chances are, your processes and procedures have some inefficiencies that could be costing your business money. Pay attention to any obvious areas where costs could be cut without sacrificing quality.
Another great way to get insight into your business’ inefficiencies is by asking your employees to point them out to you.
Often, the people on the front lines have the best idea of how to solve problems or improve inefficiencies within the business. To motivate employees to do this, you might even consider offering an incentive for pointing out inefficiencies or solving specific problems.
When you can spend your time at what you’re really strong at, your business will thrive. Most business owners don’t want to spend hours every day on their bookkeeping services.
Here are some signs it’s time to outsource your bookkeeping services.
When they’re stuck working on these, other important work often gets put off. Or maybe you have a staff member doing your bookkeeping in-house. Not only could they not be as efficient as professional bookkeepers, but their time could be better spent on other things.
In addition to bookkeeping, here are four other things you should never delegate to an assistant.
There are also significant advantages to outsourcing your CFO work. Learn more about them here.
If you’re ready to save on operating expenses by outsourcing your bookkeeping or CFO work, contact Two Roads today!
Our team is highly skilled and trained in every aspect of bookkeeping.
Here are some of the bookkeeping services we provide:
- Setup and Maintenance of QuickBooks Online (QBO)
- Reconciliation of your bank & credit card accounts
- Financial Reporting
- Paying the bills
Schedule an appointment online or call 865-212-0063 and see how we can help your business today.
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