To have a profit, you need to make more money than you spend. The only logical conclusion is that if you’re spending too much, no income can fix your problem.
So, you just need to start spending less, right?
Well, not exactly!
You see, the problem with this is that sometimes spending less means cutting resources vital for the quality of the product/service you’re providing. While cutting expenses sounds like a good idea, it might come back to haunt you in the long run.
With that in mind, here are the top five ways to save money for your business without compromising quality.
1.) Buy Used Equipment
Most of the time, you can save money without sacrificing quality by buying used equipment.
Some used equipment is still under warranty, but even if it’s not, you can get years and years of work from it with proper maintenance and luck.
The thing is that depreciation hits the majority of this equipment hard. A used laptop is probably just as good as a new one.
Even in three years, with proper care, there’s no reason why a used laptop won’t perform identically to a new device with the same specifications.
There will still be a massive price difference, which you need to take advantage of.
This is not just restricted to laptops. In construction, for instance, the demand for used machinery is skyrocketing.
There are a few caveats here. You’re taking a risk if a warranty does not cover the device.
A device may be good for years but could break down in a couple of weeks. If this happens, chances are that you won’t have anyone to complain to.
So, there are a few steps of precaution you need to take to ensure that this doesn’t happen.
First, you need to inspect the device. Just remember that you won’t be able to see everything during this rudimentary checkup.
Second, not every device carries the same level of risk. A desktop computer, for instance, can be serviced for next to nothing.
Replacing a part or two is relatively cheap and will create an impression of a new device.
If you presume that you’ll have to repeat this kind of purchase in the future, it might be best to find a vendor you can trust.
Establishing a long-term business relationship with the provider of these parts is a great decision.
2.) Consider Remote Or Hybrid Workspace
Remote and hybrid workspaces are completely dominating the modern business world. There are several reasons behind this, and they’re all, in a way, saving money for your enterprise.
First, access to a global workforce pool is an incredible advantage for any enterprise.
It means you can find and hire an expert from a region with a much lower purchasing power parity.
In other words, you get someone with the same qualifications, who might do a job even better than someone from your home region, and you get to pay less for their services.
While this business model has an exploitative note, it’s not illegal. It’s also a common practice.
Second, you can keep a smaller office (in case of a hybrid workplace), but if you’re running a fully remote enterprise, you can just run an office-less workspace.
Since office space is one of the biggest expenses on your list, this item alone can help you save the amount of money you need.
Sure, collaboration platforms and tools are an expense you can’t avoid, but it’s not like traditional enterprises are not paying for those.
Even in an office, you’ll still pay for Trello or Basecamp, which means that, from a financial standpoint, there’s no single advantage to running things in-house.
We’re not trying to say that running a traditional office is inferior in every way; however, when just talking about saving money, it’s hard to find a compelling on-site argument.
Aside from that, you also won’t have to reimburse your employees for travel expenses. This is another small win for your budget and a huge win for the planet.
3.) Control Your Representation Expenses With A Per-diem Calculator
One of the biggest expenses that small and medium enterprises face is the lack of restraint regarding the cost of representation.
People who travel for business will sometimes dip into the corporate wallet more deeply than they should. This often doesn’t happen out of bad intentions but merely out of their lack of awareness.
You need to understand that business travel is a business expense. It’s an investment like any other, and it needs to have an ROI. If you spend more than you can afford to, this ROI will be hard to meet.
This is why TravelPerk has developed a per diem calculator. It’s a simple and powerful tool that helps you calculate how much you can and should spend on your business travels.
It also helps you solve one big problem – the purchasing power disparity between your base and your target destination.
If the city/region you’re traveling to is much more expensive than the location of your headquarters, most of your travel budget plans will be off.
With this type of database, it will be much easier to find a balance between what’s appropriate and what’s cost-effective.
Just remember that austerity is not always the solution to the problem. Sure, taking a cab or an Uber to the location of the business meeting is cheaper, but renting a luxury car leaves a better impression.
There’s a reason why this category of expenses is called costs of “representation.” You’re representing a business and must do it in style. Being stylish always comes with a price.
4.) Barter Every Time
The biggest problem with saving money is that you risk sacrificing something on the other end.
Buying worse material means lowering the quality of your product. Even if you save some money in the short run, the net shift is never in your favor.
So, what if you could get the same quality and amount of material, buy from the same vendor, and pay less? This would be ideal, but how could it be possible? It’s simple, you barter.
Some people are uncomfortable with this because they don’t understand the nature of this interaction. In their minds, bartering is disrespectful.
It’s undermining the vendor’s supply value, making you appear stingy. It doesn’t have to be that way.
Sometimes, all you have to do is ask for a lower price. Sure, it’s not always that simple, but if you promise to become a regular buyer or buy a certain quantity (that you would have bought anyhow), you can bridge this gap.
By constantly bartering, you’ll eventually get better at it; however, you can improve your negotiation skills in other ways.
For instance, you could look for some learning materials on the subject matter or enroll in a course. Sure, this is an extra expense, but it’s an expense that will eventually, pay off.
Just keep two things in mind:
- No one will take offense to you just asking for a lower price.
- As long as you do it tactfully, there’s no downside.
In other words, it’s not about whether you barter or not; it’s about how you barter.
5.) Consider Using Open-source And Scalable Software
Using open-source software is a cheat code for the business world. You get to use a tool that’s sometimes just as good as the paid alternative. In some scenarios, it’s literally a choice between paying or not paying.
For example, in 2023, there’s virtually no reason to use MS Word over Google Docs. You can even add those few “extra” features that Word has with free plugins.
Since cybersecurity is such a massive expense, it’s worth pointing out that the transparency of open source also plays a huge role here.
Another essential factor you need to keep in mind is scalability. The cost of switching from one platform to another is far greater than you may initially assume.
The onboarding and training alone will be incredibly expensive. Most importantly, you could have avoided all this by starting with a platform that allows you to switch to a bigger plan.
So, our final advice on this subject is that you must look to the future. Even if a platform seems cheaper at the moment, you need to try and look into the future.
Will this cost-effectiveness stand the test of time? For instance, when choosing a SaaS contract management software.
If the answer is anything other than the resounding – “Yes,” you might need to take a step back and reevaluate your stance.
Maintaining Quality While Saving Money Is More Important Than Just Saving Money
You need to understand when it’s safe to cut corners. Before deciding to save money, you need to ask yourself if this will affect your product or the quality of your service.
Generally speaking, you must consider buying used equipment and open-source software.
These two steps will save money without compromising the quality of your work in any way. The same goes for remote and hybrid workplaces.
Second, you must incorporate tools to help you budget your business trips. Costs of representation are not to be taken for granted.
Lastly, sometimes, you just need to ask for a discount.
Ella Marcotte
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