Small businesses are the backbone of the American economy. Resourceful individuals are turning to self-employment and entrepreneurship to address downsizing, income freezes and unpalatable temporary re-employment fixes. With more than half a million small businesses launching each year nationwide, it is clear that many people find starting and running a small business both rewarding and profitable; however, not every small business will be successful. The most successful small business owners have learned the secrets of staying lean and specialized, starting with saving money and continuing with outsourcing key functions to maintain efficiency. Learn here about four key ways you can save money at your small business so you can grow and succeed now and long-term.
Outsourcing Human Resources
Businesses of all sizes today are outsourcing one function in particular: human resources. HR consulting firms specialize in supporting companies that want to save money, improve productivity, upgrade technology, increase or improve HR services and maintain legal compliance by outsourcing their HR department. Because human resources is one of the most highly specialized functions a company must maintain, this department can quickly become one of the most expensive in terms of overhead, employee investment and ongoing training. Certain HR functions are seasonal, so outsourcing human resources allows companies to retain professionals only as needed and save money.
Success With the IRS
Tax time is one area in which extra seasonal employee support is often needed. Small businesses often find that the costs of retaining highly educated and trained accounting professionals whose skills they maximize just once annually does not make smart business sense. Here is another area where outsourcing your accounting function (often this can fall under HR outsourcing) can save you money annually. You also ensure your taxes are being handled by a professional who is equipped through ongoing education and training to save you as much money on your taxes as possible. Areas where many businesses save money on taxes are deductions for a home-based business, disputing property tax increases, proper accounting of all business-based expenses (including petty cash, entertainment and travel), hiring children aged 14 and older (as employees they are in a lower tax bracket than adults) and ensuring all open credit lines have the lowest possible interest rates.
Keeping Marketing In-House
Today’s marketing costs are lower than ever thanks to the advent of social media and widespread e-commerce solutions. Keeping marketing in-house used to be a near-impossibility for most companies. Today, it is a standard smart-business practice. Additionally, many companies are able to do much more with much less thanks to the ability to set up and monitor real-time interactions with customers and vendors through social media and other Web-based tools. Marketing costs can be more easily controlled through the use of tools like Google Adwords and Facebook and Twitter promotions that allow you to start and end promotions in precise time increments and monitor advertising costs daily. As well, multimedia creation and video software make creating and sharing advertisements and promotions cheaper, faster and easier than ever. For small businesses in particular, it just makes smart business and financial sense to keep marketing in-house.
For every business there will be certain non-negotiable costs such as maintaining insurance coverage. You may have a few or several types of insurance policies depending upon your industry. Common insurance coverage includes medical (life insurance, worker’s compensation and health care) and liability (general, product, property and malpractice/professional). If you have held a policy for at least one to two years, you have useful data to evaluate whether you are spending too much, not enough or just enough for your insurance coverage. Often you can save money by shifting your coverage limits or raising your annual deductible. For policies you do not anticipate using at all or frequently (even if they represent a required coverage you must maintain) raising your deductible can net you ready cash to invest back into your business.
If you pay careful attention to each of these four categories, you may be surprised by how much cash you can save to invest into growing your business!
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About the Author: Halle Klein owns an HR consulting firm. She also offers monthly small-business consulting workshops for her many small to midsized business clients. She is a proponent of strategic outsourcing and Internet marketing to maintain profitability.