Every entrepreneur knows that minimizing expenses is essential to maximizing profit, but we don’t always know how to go about cutting costs – especially for big ticket items. The longer I’m in business, the more I realize that paying full price for something is rarely necessary. Here’s my list of tactics to avoid spending more than you have to:
- Buy generic. Whether you’re talking about antibiotics or office equipment, insisting on a brand name will nearly always cost you more. Shopping based on reviews, rather than name recognition will get you better quality for a better price.
- Borrow. Look around your office, and I guarantee you’ll find a piece of equipment that you don’t use very often. Whether it’s a box truck that you use twice a year, or whether it’s a fancy printer/scanner/copier that you only use to do your quarterly newsletters, examine your purchases and find someone to lend you the big-ticket items that you only need infrequently.
- Lease. For seriously big-ticket expenses, especially those that you only plan to keep for a short while, or will incur significant maintenance charges, you should consider whether a lease is a good option. If you must have a late model car, but you don’t need to put lots of miles on it, then a lease may be ideal. Large office equipment can be cheaper to lease than purchase as well.
- Be patient. We often don’t realize it, but a lot of purchases are made because of emotional, rather than practical reasons. If you force yourself to sleep on a decision, you’re taking emotions out of the equation, and you’ll find that you frequently choose not to buy after all. Make yourself wait, and you’ll inevitably save money.
- Barter. Trading your unique skill set for talents you don’t possess is one of the best ways to save money – and strengthen community ties as well. Trading your pizza shop’s delicious fare for business card printing services can benefit everyone involved with very little outlay of cash. While you used to be limited to your immediate community to make bartering practical, there are now websites like TradeAway and BarterOnly that facilitate trading using sitewide credits so that you don’t have to find someone who needs exactly what you have to offer in order to get what you’re looking for.
- Buy used. Products start depreciating as soon as you purchase them, and finding lightly used alternatives can save you a boatload. If you’re savvy, you can often even find products that are still under warranty, and you may even find ones that are sold with an extended warranty that protects your investment.
- Share. Whether it’s infrequently used equipment or facilities like break rooms in your office space, if you look hard enough, you’ll find that you and other businesses are spending far more than you should on things you don’t use very often. Working with folks in close proximity and finding the ways in which you’ve duplicated purchases can clue you in to options for making more efficient use of items you can share. Think about negotiating a lease at a lower rate for shared restrooms on your floor, rather than several individual ones, or sharing a microwave or refrigerator with your neighbors in the office building.
I’ve always admired entrepreneurs who find innovative ways to spend less, and I constantly strive to be a better penny pincher when I can. I don’t advocate cutting corners or sacrificing quality where it matters, but I do suggest taking a look at your business and identifying areas where you’re spending more than you have to.Tags: Accounting, Finance, Mondays with Mike, Money Management