The pandemic has seriously impacted economies all over the world, and the United States is no exception. Online review site Yelp has been monitoring business closure since March and their analysis paints a bleak picture. As of the end of August, a total of over 163,000 businesses have closed in the country. Almost 98,000 of these businesses have closed permanently due to constraints.
Although these economic issues impact businesses of all sizes, smaller businesses are taking the brunt of the damage. In July, 58 percent of small business owners expressed concern about the survival of their companies and it seems their worst fears have come true.
The primary cause of business closure is cash flow problems. Even before the pandemic, 82 percent of small business failures stemmed from cash flow issues and 29 percent closed because they ran out of funds. If you want your small business to survive, you need to reduce spending as soon as possible.
Here are six cost-cutting measures you can consider that can help save your small business from bankruptcy.
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- Explore the Gig Economy
You may want to resist hiring full-time employees when your small business is on the ropes. But you may still need someone to do small but essential tasks for work. Freelancers and outsourcing companies can offer effective and affordable solutions. That is why many companies use EOR services so that they can outsource the HR department and therefore cut in some costs. For example, if you’re running a restaurant, hiring a dedicated delivery person can be a little expensive. But thanks to online food delivery apps and similar programs, you can still send out your customers’ orders without increasing your expenses. Hiring freelancers also ensures you can focus on running your business instead of training a new employee.
- Invest in Digital Marketing
More customers bring in more income and you need to expand your sphere of influence if you want more people to be aware of what your small business can provide. Traditional marketing channels like television commercials and newspaper ads can be too expensive and time-consuming for a small business. Digital marketing provides small enterprises with an effective medium to reach potential customers. You can outsource SEO work to experts who can help your business appear on local search engine results and boost your online presence.
- Switch to Remote Working
Rental prices on commercial office space can be taking up a lot of your budget. Given that the health authorities say people should avoid confined and crowded spaces, you may save a fortune and your employees by switching to remote working set-ups. This can offset a lot of costs, namely office rent and bills for utilities. Remember to provide your employees with the hardware they need to work efficiently from their homes. These pieces of equipment can include the best Wi-Fi extenders available on the market or company laptops.
- Go Over All Expenses
The best way to determine which costs you can cut is to get a handle on all your business expenses. Amass all receipts and documents on what your business is spending on and go over everything with a fine-toothed comb. This can reveal financial redundancies you can slash to increase your business cash reserves. For example, going over your expenses can reveal employee allowances you can re-negotiate or services you’re still paying for that you don’t need anymore.
- Form Partnerships
In these trying times, other businesses are your allies. Scout out local business you can form effective partnerships with. These businesses have to directly compliment the service you’re providing to avoid becoming competition.
For example, if you run a small bookstore, perhaps you can partner with a local cafÃ© or bakery to come up with a profitable venture. An effective partnership can also relate to your supply chain. Ironing out a deal with your suppliers for reduced prices can do a lot for your small business in the long run and help both your companies survive.
- Analyze Supplies
Speaking supplies, make sure your business is buying as close to as it needs as possible. For example, buying in bulk can seem like a cost-saving measure, however, if you simply toss most of this bulk in the trash, you’re just wasting resources. Analyze how much of any supply your business is actually using and you can trim down on costs by ordering only what you need. You should remove redundant supplies. If your business has shuttered its main office and your employees are working from home, you won’t need coffee or paper reams.
Your small business could be a vital lifeline not only for you but for your employees. Ensuring your business survives through these lean times means making some sacrifices. These cost-cutting measures can help you take care of your business and your employees at the same time.