Running a business costs money. Even with less expensive technology and marketing tools, somehow costs still manage to add up and unfortunately, these costs can continue to increase regularly. To help keep your profits up, you need to be able control your expenditures effectively and cut a few corners to help you save that extra pound here and there to decrease your overall expenditure. Here are ten ways to cut small business expenses
Remember when our parents used to tell us to make sure we are saving at least half of our allowance, it is the same for business! It can be hard to think about putting money away while you have consistent cash flowing in and out.
But a good tip to try to save some money is to reserve a third of profits every month into a hard to reach bank account. This can then be used for an end of year tax bill for your dental practice or in the event you need cash for an emergency. This savings account can be your saviour when you have unexpected expenses, it will act as a surplus of cash sitting there without you having to rely on a loan.
Saving money is essential for businesses, just like it is for individuals. While it may seem challenging to set aside funds when cash flow is consistent, it’s crucial for financial stability. A helpful strategy is to allocate a portion of profits, such as a third, into a separate savings account each month. This reserve can serve as a buffer for unexpected expenses or end-of-year tax obligations. By building up savings, your dental practice can avoid reliance on loans and have a safety net for emergencies.
When making big expenses, try to pay as much as you can on a point accumulating credit card. Cards such as American Express or British Airways Miles give you rewards when you spend with them. American Express points transfer into money while continuous spending with a BA card can convert points into miles and allow you to save on business trips.
Remember to be sure to pay your monthly bill so you don’t end up racking up any extra charges. No matter what sector your company is in, every business, including dental practices, has expenses. So, you might as well be earning while you are spending.
Maximize rewards by using point-accumulating credit cards for significant expenses, like American Express or British Airways Miles, but ensure timely bill payments to avoid extra charges, benefiting dental practices and other businesses alike.
Keeping the taxman at bay is one of the most important tips we could ever give you. Minimising your tax bill can be the most beneficial way to improve your business expenses. Taxes are the one expense that cannot be avoided, but minimising them is a great way of working around this issue. This means maximising all your available business deductions in order to reduce your tax liability.
Maximize available business deductions to reduce tax liability, effectively minimizing expenses and improving overall financial health for your dental practice.
The best advice we can give you is that when you stay on top of all your expenses and payments, you have control over your cash flow which is the best position you can be in. Even if you are slightly lacking in profits, the control you have over your outgoings will help you get on a path that will allow figures to get higher.
You should also get into a habit of keeping track of all business expenses, that means every single one including keeping receipts. An expense that is often overlooked is vehicle mileage. If you are serious about cutting your expenses then you need to record the mileage you do for business purposes.
Maintaining meticulous records of expenses and payments empowers you to control cash flow, paving the way for improved profitability, while diligently tracking every business expense, including often overlooked items like vehicle mileage, is crucial for effective cost management.
Make the most of your time
It is important to know the value of your time and to make sure you are using it efficiently. Many business owners swap time in an effort to save money. An example of this is when you are driving an hour to pick up supplies and stock to save on a £10 shipping cost.
By doing small things like this you are essentially saying your time is worth less than £10 an hour! Not to mention the fuel costs included. The hour you wasted driving could have been utilised in a better way for you to earn more money than the money you didn’t save, but lost in that hour. Efficiency leads to more productivity and profit. And it all starts with knowing your goals, being organised and having a plan.
Many successful entrepreneurs begin their day with a morning routine that sets the day for productivity. Having a schedule and routine will help you time manage your life to keep you productive and efficient.
Finally, delegating and outsourcing. The weight of your entire business should not rest on your shoulders. There are ways to delegate and outsource certain jobs that do not have to be done by you. In order to improve efficiency, outsource certain business practices to a third party specialist.
It might seem like hiring an outside vendor will increase your costs, however, in the long run, delegating specific tasks to specialists can save you money and generate even better results by leaving you time to do what you do best. There are also cost effective ways to do this such as using apps and websites such as upwork or automation tools that can help you take care of your business needs while you have the time to focus on what you do best in your business.
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Switch to the cloud
For many businesses a great way to reduce capital costs and ongoing IT related expenses is to switch to cloud computing. Cloud computing will help your business thrive by optimising costs and improving efficiency. With cloud computing, the need to purchase and maintain expensive ongoing software updates and servers on site is diminished.
The cloud allows you to always have the latest versions of business applications and your cloud provider will be able to take care of most data recovering issues, hence freeing your business from worrying about the implications and expenses of complex IT disasters.
Transitioning to cloud computing not only reduces capital costs and ongoing IT expenses but also enhances efficiency by providing access to the latest software versions without the need for expensive on-site servers, while cloud providers handle data recovery, alleviating concerns and expenses associated with IT disasters.
Avoid interest charges
This is one of the most important tips we can give you. Before embracing small business financing options for your dental practice, or any sort of credit, you need to calculate the interest rates that you are going to accumulate. Every pound that you pay in interest is a pound that will not accrue to your net earnings. Before venturing to find any kind of capital that will incur high interest, try tapping into friends and family favours for interest-free start up capital!
A great tip is to pay off your highest loan rate first. So any short term rate, high debt that you may have such as credit cards or short term loans, always pay this off before you land yourself in hot water. Otherwise, you will be accumulating higher and higher costs and interests which will result in you eventually paying out more than what is coming in. Staying on top of these costs will allow you to keep on top of profits and manage costs effectively.
To maintain profitability and manage costs effectively, it’s crucial to avoid interest charges by prioritizing the repayment of high-interest debts, such as credit cards or short-term loans, and seeking interest-free startup capital from friends and family before resorting to small business financing options, as every pound paid in interest detracts from net earnings.
Raise your fees routinely. A 10% increase in fees can lead to a much larger increase in profits if your overheads are remaining constant. So always look at your prices on a very regular basis as this can make a huge impact on the profitability of your business.
Consider setting up a premium or VIP service in your business. A small percentage of your customers will be willing to spend a lot on a premium or exclusive service. Even a handful of customers paying for VIP products or services can result in a large profit.
Regularly reviewing and raising your fees, even by a modest percentage, can significantly boost profitability, especially if overhead costs remain stable, while offering premium or VIP services to a select clientele can generate substantial profits from a small customer base.
Pay invoices early
There are many vendors that offer small discounts to clients that pay invoices ahead of schedule. It is these discounts that add up at the end of each month showing you how much you can save. As long as paying early does not impact your cash flow negatively, it usually makes financial sense to do so and also gain personal credit with the vendors knowing that you are a standup customer.
It is also very important to remember to always get free quotes for any big capital item you purchase as prices vary greatly amongst distributors. And you should do the same for small supplies that you do every month such as materials. Price Match products at least once annually. You will be surprised how much you will be able to save from comparing costs.
Paying invoices early can lead to significant savings through vendor discounts, while obtaining free quotes for capital items and price matching small supplies can further reduce costs and improve financial efficiency.
Click here to read our article on Dentist and Dental Associate Expenses Guide
When you shop around to find deals you will be surprised at the difference in rates for the same products from different suppliers and providers. As a small business owner you are always looking for ways to optimise your resources and cut material costs, here are a few suggestions on how to cut small business expenses:
When it comes to wholesale supply costs, every penny saved is essentially a penny earned. If you are running a business that regularly makes a lot of wholesale supply purchases, getting the best deal on supplies can make a huge difference with your outgoings. As a business owner you need to be constantly monitoring supply costs and checking for discounts as well as alternative lenders with better prices.
You can also cut advertising costs as there are now more potential customers online now than ever before. Advertising does not have to be expensive, you can start by simply creating an online presence through social media or a website. Direct email is another highly effective low-cost marketing solution. Publicity is free and a great low-cost way to build your credibility. Other great cost effective options include cold calling, carrying business cards and asking for referrals.
Insurance is an expense that no business can evade, you cannot afford to avoid spending money on insurance. However, increasing your deductible is one way to reduce your premiums. Just be sure that the amount of your deductible is not higher than what your business can afford if you have to make a claim. If you are a member of a professional organisation or a big company, you may be able to take advantage of group rates.
Cutting costs through strategic monitoring of supply expenses, leveraging discounts, and exploring alternative suppliers, alongside adopting low-cost marketing methods and adjusting insurance deductibles, can significantly improve a small business’s financial health.
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More on how to cut small business expenses
In conclusion, within every business in our uncertain economy, every penny counts, even the smallest percentage off an entire invoice will save you money. The biggest aspect of managing your spending is managing your time.
As your business grows, understanding things like operating costs and cutting any unnecessary costs is going to become more and more important. Operating costs will allow you to take an in-depth look at how your expenses are impacting your profits. Once you start cutting unnecessary costs you can start boosting profits.
Dental Accounts & Tax Specialists
As dental practice owners ourselves, we know what makes a clinic tick. We have been working with dentists for over 20 years to help manage their accounts and tax.
Whether you’re a dental associate, run your own practice or own a dental group and are looking to save time, money and effort on your accounts and tax then we want to hear from you. Our digital platform takes the hassle and the paperwork out of accounts.
To find out more about how you can save time, money and effort on your accounts and tax when you automate your finances with Samera, book a free consultation with one of our accounting team today.