When you’re running a small business, it’s important to account for every dollar invested in your company. From filling the employees’ coffee pot to paying your monthly invoices, every dollar you spend needs to serve a smart purpose. Here are a few key places to start if you’re looking to minimize operating costs and improve your cash flow.
Streamline Business Processes
You’ve undoubtedly heard the adage that time is money. Make sure you’re investing your workers’ time wisely so you can stop paying for hours that aren’t being used optimally. Map out the current workflows for routine activities.
Identify how each employee spends their time and examine these processes carefully to ensure that you’re making the best use of each worker’s hours.
Begin by eliminating unnecessary activities. If employee engagement and interaction are minimal at your Monday meetings, consider replacing them with a brief email of bullet points to kick off the week. If there’s little to no ROI from time-consuming marketing communications, reexamine your strategy and take a more targeted approach. Move from weekly to monthly reports if the data isn’t actionable with every delivery. Streamlining workplace routines will add valuable hours back into the week, which can translate to greater productivity and profits.
Consider Going Virtual
The COVID pandemic highlighted many previously overlooked possibilities for business operations. Displaced from the traditional workplace, many companies discovered that employees can do a great deal of work from home. Your company may benefit from keeping some of these remote practices in place or even implementing new ones.
If you’re operating a construction business and spend most of the time on-site operating heavy machinery, ask yourself whether you really need to maintain a brick-and-mortar office building. You may find that you can eliminate the cost of rent, utilities, and office equipment by utilizing remote employees for administrative tasks. Zoom meetings make it possible to connect with multiple work sites without the travel time and associated costs of gathering in one location. Implementing virtual strategies can help you cut down on your operating costs.
Compare Vendors and Service Providers
Carefully examine your business cash flow and identify where your dollars are going for each and every activity. While it’s quick and convenient to stick with known vendors and service providers, it’s also important to pause and compare prices periodically. Check the cost of comparable materials from other suppliers in the area. If you find a lower price from a competitor, bring this to the attention of your current vendor or service provider. In many cases, the current supplier will negotiate a deal to keep your business.
Providing a request for proposal (RFP) for your vendors will streamline the process of collecting detailed bids with all the necessary information. Compare at least three different options every time you tackle a new project to make sure you’re getting competitive prices and keeping your operating costs as low as you can. Inquire about discounts for paying your invoices early as well. Many vendors will discount your invoices if you pay early.
Examine Your Recurring Bills
Take a close look at your recurring bills. It’s easy to let these regular expenses fly under the radar, but you need to look at them closely from time to time to make sure you’re not routinely paying for something you don’t really need. Is your bank charging fees that you could eliminate by moving to a different financial institution? Are you paying for more software subscriptions than you’re actually using? These small charges can add up over time.
Invest in Profitable Growth
Sometimes it takes money to make money. While eliminating expenses is the most obvious way to optimize your business cash flow, you may also benefit from wisely getting working capital. Taking out financing for your business and paying it back in a timely manner will help you build a strong credit profile for the business, which can help you gain access to more and better funding opportunities in the future.
Used wisely, these funds may enable you to make purchases that ultimately increase your potential profit. For example, buying a second commercial delivery truck may enable you to fill more orders. Improving your restaurant equipment to prepare meals more quickly may allow you to serve a greater number of customers. The right business loans can ultimately improve your cash flow.
If you’re looking for business financing, we can help. First Capital Business Finance offers a variety of funding options, including working capital business loans. Contact us now to learn more.