Rising costs and looming fears of a recession have prompted many small business owners to seek ways to conserve their resources. Targeted measures to keep overhead expenses under control can help your business to withstand turbulent conditions. Considering your operational needs and short-term spending power, consider these four strategies to manage your expenses.
1. Look for Ways to Lower Debt and Trim Interest Payments
Payments towards outstanding debts can represent a significant percentage of a company’s operating budget. When you have to direct a great deal of your incoming revenue to stay current with obligations to lenders or other types of creditors for funds you’ve already used, it can undercut your ability to afford new expenses.
It is particularly true when you’ve entered into loan agreements with high-interest rates. If you’re making sizable payments towards outstanding debts but aren’t making much progress with bringing down principal balances, it may be advantageous to restructure your obligations. Refinancing your debt or taking out a new loan with better rates to pay off debts might save you a lot on interest in the long run.
2. Research Lending Options Thoroughly
As you explore new funding opportunities to pay for upcoming expenses, look for the best small business loan rates online. Evaluate your practical objectives to determine which type of opportunity will be the right fit and how much funding you should seek.
The online marketplace for small business lending has been growing, and lenders aim to offer competitive terms to attract as many applicants as possible. Of course, you must present yourself as a strong applicant to qualify for the best possible interest rates and terms.
3. Become More Energy Efficient
Simple tactics to moderate energy usage can put a big dent in monthly electric bills. Energy costs are rising, so carving out some savings on this key overhead expense could save you an increasingly large amount of money on your utility months over time.
Another notable benefit of using less energy is improving your company’s overall sustainability. For the most part, consumers want to work with companies that demonstrate environmental accountability. So being able to tell your customers what you’re doing to advance sustainability initiatives can help you cultivate a positive public image and set your company apart from your competitors.
Heating and cooling costs commonly account for a huge volume of companies’ energy consumption, so this should be one of the first places to look for potential savings. In addition, a preventive maintenance program that includes period cleaning and calibration will make a system operate more efficiently.
If heating and cooling equipment’s performance has declined due to age, investing in a new system may be wise. It’s more sensible than trying to address performance with costly repairs on a system that doesn’t have much working lifespan left. If you anticipate needing a replacement within the next two years, start planning the upgrade and availing yourself of energy savings rather than waiting until a system fails altogether.
Next, consider other energy expenses like lighting. Outfit your business’ operating space with LED lights. Retrofit outdated fluorescent or halogen lighting fixtures to accommodate LED ballasts.
4. Make the Most of Tax Deductions
Many small business owners don’t harness the total value of their deductible expenses to reduce their tax liabilities. Consequently, quarterly payments can be significantly more significant than they should be. There are several reasons why this happens. In some instances, busy owners who wear many different hats handle their business’ accounting and recordkeeping functions independently. It can lead to oversights or deficiencies documenting things like interest payments on loans, carryover losses, or the depreciation of business assets.
To reduce your tax liabilities, use accounting software that makes it easy to track and quantify deductible expenses. Get assistance from a professional account that has experience serving small businesses that are similar to your own.
You’ll be better equipped to allocate your working capital towards growth initiatives by reining overhead and reducing liabilities. You’ll also have an easier time maintaining a healthy reserve account and making your business resilient amid economic uncertainty.
