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Experts Weigh In on SMEs’ Ways to Save Money

By Megan Doyle

Every small or midsize business (SME) is unique—but they all share a common goal to keep expenses low. Luckily, despite the many different types of businesses and their different expenses, business experts have identified a variety of ways that show any SME how to save money by cutting costs on things like utilities, equipment, supplies, payroll, and more.

Saving Green by Going Green

 

Of all the possible ways to save money, going green is often overlooked. But Harvard Law School’s energy manager provides this neat tip: An act as small as reducing a PC monitor’s brightness from 100 percent to 70 percent can save up to 20 percent of the monitor’s energy cost—and most people won’t even notice much difference.1 The Guardian notes that encouraging employees to be energy conscious at work by shutting down computers, turning off lights, and only heating areas in use can be a major way to help SMEs save money.2

 

To help save energy, resources like the Environmental Protection Agency’s Energy Star program offer tips on running an energy-efficient business.3

 

Similarly, the prices of paper, ink, and postage might seem minimal, but add up quickly. Printing only what is necessary, paying bills online, and filing paperwork via cloud networks can also contribute to SME money savings.4 What’s more, many utility companies, banks, and point-of-sale systems offer financial incentives for going paperless.5

 

How to Save Money Using Refurbished Equipment

 

Brand new equipment can be expensive—and unnecessary. Many SMEs do not yet have the extra capital to justify such major purchases, especially when starting out. Instead, The BalanceSmallBusiness suggests a good way to save money is for SMEs to purchase used or refurbished goods, which are often just as good as new but cheaper.6 Established businesses often have old equipment for sale or lease—but The Balance suggests looking for an expert opinion to determine if such equipment has any flaws.7

 

For smaller daily-use supplies like desks, chairs, or printers, businesses may wish to check local newspapers or online classified ads.8 There’s always craigslist.

 

Keep an Eye Out for Discounts

 

Vendors tend to give large discounts when selling goods in bulk, which can save an SME 20 percent or more, according to some experts.9 But bulk purchases cost more up-front, and can take up critical inventory space. Entrepreneur magazine suggests SMEs form a buying alliance with other businesses to save both space and money when buying in bulk.10

 

The magazine’s experts also recommend seeking at least three bids on all purchases, as shopping around can be an effective way to save money. If a business is loyal to a certain vendor, for example, but a competitor offers a lower price, it’s likely the vendor will match the competitor’s price to keep the business.11 Negotiating payment terms can also help SMEs to save money when making a business deal, and some vendors give discounts for early payments.12,13

 

Bartering is One of the Best Ways to Save Money

 

The Balance also suggests bartering as a way for SMEs to save money, by exchanging necessary goods and services with other businesses.14 An auto repair shop, for example, may do mechanical maintenance in exchange for plumbing services from a nearby plumbing company.15 But it’s not just about proximity—bartering can also work for online-based companies.

 

Barter brokers and other resources like the National Association of Trade Exchanges (NATE) are available to help businesses bargain and swap with other businesses.16,17 But take care—bartering can have tax consequences.18

 

Get What You Need

 

It may be obvious but it has to be said: Full-time employees aren’t always necessary from the get go. And when an SME does have enough employees to need regular IT support, for example, it may make more sense to contract an IT tech person instead of hiring one.19 Using freelancers and contractors helps cut costs because they provide work only when needed.20

 

When it comes to software, experts recommend SMEs carefully consider the differences between their wants and their needs. Businesses can save money by eliminating all but the most vital applications, and by switching to free software when available.21 Free software may lack premium enterprise features, but the full feature set isn’t always necessary for small businesses.22

 

Keep Track of Expenses

 

Budgeting can seem like a burden when businesses are very small, but experts say it still helps an SME make smart, money-saving financial decisions—especially when preparing for tax season.23 Tax experts suggest businesses put aside a fixed amount each month for taxes to help prevent a major lump-sum surprise at tax time.24

 

Reducing credit card debt can also help save a business money. Charging expenses to a business credit card can reduce immediate cash flow needs, but if the balance isn’t paid off during the no-interest period then fees and interest rates can add up quickly. Paying off debt may seem like an expensive way to reduce business costs, but experts say reducing interest cost leads to a healthier business in the long run.25

 

The
Takeaway:

No matter what business an SME is in, understanding the best ways to save money may be crucial to success. According to experts, actions like going green, buying used equipment, bartering, hiring only when necessary, and disciplined budgeting can cut costs and help small businesses keep their heads above water.

Megan Doyle

The Author

Megan Doyle

Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.

Sources

1. “Reduce Monitor Brightness to Reduce Energy,” Harvard Law School; https://green.harvard.edu/tools-resources/green-tip/reduce-monitor-brightness-reduce-energy
2. “Five quick money-saving tips for SMEs,” The Guardian; https://www.theguardian.com/small-business-network/2014/jan/15/sme-saving-tips-business-costs
3. “Energy Star,” Energy Star; https://www.energystar.gov
4. “10 Ways to Reduce Small Business Costs,” The BalanceSMB; https://www.thebalancesmb.com/reduce-small-business-costs-2951415
5. “7 Ways to Save Money as a Small Business Owner,” ThriveHive; https://thrivehive.com/7-ways-to-save-money-as-a-small-business-owner/
6. “10 Ways to Reduce Small Business Costs,” The BalanceSMB; https://www.thebalancesmb.com/reduce-small-business-costs-2951415
7. “Top 10 Ways to Save Money When Starting a Business,” The BalanceSMB; https://www.thebalancesmb.com/top-10-ways-to-save-money-when-starting-a-business-4116845
8. “7 Ways to Save Money as a Small Business Owner,” ThriveHive; https://thrivehive.com/7-ways-to-save-money-as-a-small-business-owner/
9. “How Much money can Buying in Bulk Save You in One Year,” The Balance; https://www.thebalance.com/how-much-does-buying-in-bulk-save-you-4165997
10. “50 Ways to Save Money in Your Business,” Entrepreneur; https://www.entrepreneur.com/article/71318
11. Ibid.
12. “Top 10 Ways to Save Money When Starting a Business,” The Balance SMB; https://www.thebalancesmb.com/top-10-ways-to-save-money-when-starting-a-business-4116845
13. “50 Ways to Save Money in Your Business,” Entrepreneur; https://www.entrepreneur.com/article/71318
14. “10 Ways to Reduce Small Business Costs,” The Balance SMB; https://www.thebalancesmb.com/reduce-small-business-costs-2951415
15. “7 Ways to Save Money as a Small Business Owner,” ThriveHive; https://thrivehive.com/7-ways-to-save-money-as-a-small-business-owner/
16. “50 Ways to Save Money in Your Business,” Entrepreneur; https://www.entrepreneur.com/article/71318
17. “About NATE,” NATE; http://www.natebarter.com/about-nate/
18. “The Tax Implications of Bartering,” Investopedia; https://www.investopedia.com/financial-edge/0312/the-tax-implications-of-bartering.aspx
19. “Top 10 Ways to Save Money When Starting a Business,” The BalanceSMB; https://www.thebalancesmb.com/top-10-ways-to-save-money-when-starting-a-business-4116845
20. “7 Creative Ways for Your Small Business to Save Money,” Due; https://due.com/blog/creative-ways-to-save-money/
21. “10 Ways to Reduce Small Business Costs,” The BalanceSMB; https://www.thebalancesmb.com/reduce-small-business-costs-2951415
22. “Top 10 Ways to Save Money When Starting a Business,” The BalanceSMB; https://www.thebalancesmb.com/top-10-ways-to-save-money-when-starting-a-business-4116845
23. “10 Ways to Reduce Small Business Costs,” The BalanceSMB; https://www.thebalancesmb.com/reduce-small-business-costs-2951415
24. “5 Money-Saving Tips for Your Small Business,” NBC News; https://www.nbcnews.com/business/your-business/5-money-saving-tips-your-small-business-n800466
25. “10 Ways to Reduce Small Business Costs,” The Balance SMB; https://www.thebalancesmb.com/reduce-small-business-costs-2951415