3 Ways to Lower Costs for Small Businesses

As inflation reaches a 40-year high, businesses and households are looking for ways to lower costs. If you’re a small business owner, you likely know the challenge of stretching your budget. Consider these tips to help reduce costs.

Reduce Supply Expenses 

When it comes to reducing supply expenses, shopping around to compare prices is a good place to start. As a business owner, it’s easy to get comfortable with a vendor and never bother to check whether better prices and service are available elsewhere. While the large discount suppliers, e.g., Amazon and Walmart, usually have the best prices, don’t overlook non-traditional vendors and your local mom-and-pop stores.

In addition, businesses should consolidate shipments into larger orders in order to cut down on frequency which can offer potential savings. Another big contributor to high costs in supply chain management is seen in inventory management, or lack thereof. Oftentimes inventory can be misplaced, lost, spoiled, and/or damaged, so strong oversight in this area is essential.

Examine Your Financial Accounts

When looking for ways to lower costs, do a thorough review of your financial accounts, especially bank accounts and insurance policies. By consolidating accounts and eliminating duplication, business owners can simplify their lives and save time and money. Oftentimes, these accounts and relationships haven’t been reviewed in years and you might be over-insured or paying higher than normal fees for these services. Companies should also look at eliminating unnecessary or high-interest debt, which can affect your current cash flow, company rating, and your ability to borrow in the future.

Invest in Technology to Improve Efficiency

The COVID-19 pandemic forced many small businesses to make dramatic changes in order to survive. Those who adapted and embraced technology early on typically fared much better than those who were slow, resistant, or unable to make changes. As we continue to emerge from this pandemic, adopting virtual technology into your small business can be a tremendous cost reduction strategy.

Want to minimize travel expenses? Use virtual meetings instead. You can also eliminate or reduce the need for physical space via virtual offices. While it might not be practical to completely do away with personal contact, many businesses continue to relegate these types of interactions to situations when it is absolutely necessary. The integration of video apps and programs, such as Microsoft Teams, Slack, Zoom, Google Meet, Cisco Webex, etc., are a testament to this shift away from in-person meetings. In addition, by moving to centralized company documents, businesses can save on ink, paper, and postage.

There are many other potential cost-cutting measures, but by focusing on some of these top ideas, small businesses can cut significant expenses and help improve the company’s bottom line. Call or visit your local PlainsCapital Bank and consult with our dedicated and experienced business bankers to learn more. You can also find several helpful online resources at our small business page.