Manage episode 284851819 series 1082451
Every small construction business owner knows how challenging it is to cut down expenses without somehow compromising internal or external quality. Regardless of your business's nature, the first step to reducing your overhead costs is to take the time to go through every single expense you have. Next, assess which ones are necessary for your business to operate smoothly, what can be trimmed down, and what can be eliminated. It's important not to rest on your laurels. Continually thinking of ways to reduce your overheads is essential for a healthy cash flow, so conducting regular reviews of your business expenses should be a routine task.
Here are some smart and practical tips that you might not have considered to lessen your costs while maintaining employee and customer satisfaction.Negotiate with suppliers
Don't hesitate to contact your suppliers and vendors to request flexible monthly payment plans or discounts, especially with the current challenging economic climate. They are often willing to help out small- and medium-sized business clients and cut them a break.
Review your software subscriptions
It is no secret that cloud-based apps and tools can help you manage your business with ease. Although a few dollars a month might seem affordable at first, the costs can quickly add up once you set up your subscription for multiple apps.
If you want to reduce your overhead costs, audit your recurring software subscriptions and cancel those you rarely use. You might also want to downgrade your plan or opt for the free version of these tools. Furthermore, you can search the internet for cheaper or free alternatives that offer the same functionality.
Maintain a paperless office
If you are still relying on physical printing, going all-digital and paperless will remove printing-related costs and keep your documents better organized. Aside from being cost-effective, a digital workplace is also environmentally friendly and means data is easily accessible.
Revisit your Marketing Strategy
To grow your business, you must be willing to set some marketing budget, even if you are trying to cut down on expenses. However, before you continue with your marketing strategy, it is crucial to evaluate each channel and its return on investment.
Get a clear idea of how much you are spending and gaining from each marketing channel. Test and measure different media, and re-allocate your budget accordingly if you find one that isn't working.
Get a financial advisor
Regardless of how confident you are with your new budgeting, it pays to have a fresh set of eyes to look into it. An experienced accountant can provide you with an objective analysis of your budget allocations and help you save even more on your expenses.
Ways to save
There are several things you can look at here, tried-and-true methods for keeping costs down. Some of the most effective are:
- Business taxes – talk to us about ways you can legally save on your taxes. For instance, can you claim your home area as an office, which is a legitimate business expense?
- Importing – you could look at importing your business's raw materials. It could be that they're cheaper to buy from an overseas supplier than the one you've been using locally.
- Make the most of technology – moving your accounts to a cloud-based system, reducing manual paperwork processes, and communicating with your customers over Skype or Zoom instead of visiting them face-to-face will all help reduce costs. You can even have your staff work from home and, as mentioned above, save on renting a commercial space.
Final thoughtsCash flow is the lifeblood of any construction company, especially those with annual sales volume under $1,000,000. Some construction Company experts even say that healthy cash flow is more critical than your contracting company's ability to complete projects. While that might seem counterintuitive, consider this: if you fail to satisfy a customer and lose that customer, you can always work harder to please the next customer. If you do not have enough cash reserves to pay your suppliers, creditors, and make payroll, then your Construction Company is out of business; game over!
About The Author:
Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or firstname.lastname@example.org