Earlier this year in its 2015 Year End Economic Report, the National Small Business Association found that small business owners reported optimism about their financial prospects going into 2016, with 45% indicating they expected their revenues to increase during the year. This was virtually unchanged from a year prior and indicated a relatively healthy view of the economy. However, it is important to note that left over half of participants responding that business would either decrease or remain flat. And that means that it is important for business owners to think about ways to grow the bottom line, and that can have a positive impact on revenue.
Here are three easy ways to make changes that could make a difference to your business.
Rent reduction. This is a major expense for many small businesses. Unless you are in retail or food service that is dependent on a physical space, there may be opportunities to save big bucks on this category. With the explosion of shared workspaces and telecommuting growing in acceptance, you may be able to downsize, or eliminate an office completely.
Marketing smarter, not more costly. In today’s increasingly connected world, small businesses can be more effective with the marketing dollars they already spend by being creative. Instead of buying more ads, consider investing in different types including Pay Per Click (PPC) digital ads which can be very cost effective and can drive traffic to your website. And don’t forget your social media channels—they can be a very cost effective tool for creating brand awareness and a perfect place to promote specials you run.
Tighten up collections. If you often find yourself in a cash flow crunch due to slow paying customers or vendors, it’s time to take a look at your accounts receivable process and consider some changes. Extending less credit terms to customers decreasing payment due dates are relatively easy changes to implement. Think about personal reminders to customers the day before their invoice due date, ensuring it was received can encourage on time payment. When all else fails, collections agencies are expert at handling delinquent accounts and can recover at least some of the monies owed in extreme circumstances.
Of course, this is by no means an exhaustive list but merely a few suggestions to help you start thinking about ways to be more cost effective. This is a good exercise to go through whether your business is growing or not, since all business owners want a healthy bottom line.
After all, as Benjamin Franklin extolled over two hundred years ago, a penny saved is a penny earned.