All businesses incur monthly expenses, which depend on their industry, size, and business practices. While there is no way to eliminate these costs, as an owner it’s important to keep these in check to maintain healthy business finances. In this article, we’ll explore how to take stock of these expenses, make smart decisions to reduce business costs.
Types of Recurring Costs
First, let’s look at the various types of recurring costs you can incur:
Office Costs: Working out of a commercial space or from home will include utility costs of electricity, internet, and water. In addition, you may need to pay for cleaning charges and taxes.
Supplies: As reported by ICTSD, small businesses can expect to spend around $100/month on office supplies such as stationary i.e. paper, folders, markers, paper clips, binders, and printing costs.
Digital Subscriptions: Whether it be managing finances, planning marketing activities, or daily collaboration, various SaaS apps can be used. While these applications help scale your business, you will also incur multiple subscription costs. The more apps you use, the higher the costs will be.
Reducing Recurring Costs
Here are a few tried and tested ways to reduce recurring costs for your small business:
Create a Budget: A budget is the best way to maintain a grip of all the various recurring costs. Not only will a budget help manage your cash flow better, but you’ll also be able to highlight areas where you are overspending and take corrective steps.
Negotiate with Your Landlord: Lease renewals are the perfect time to renegotiate your rent. If the market price of the area has fallen, try to negotiate a lower rent for your space.
Hammer Out a Deal with Service Providers: If you have used a service provider for your mobile, internet, bank cards, etc., for a long time, they may offer you lower prices on their plans. Additionally, being a business you could be eligible for further discounts.
In addition to these steps, you can seek to register your business as a Limited Liability Company. As reported by Simplify LLC, this will help you as LLCs pay lower taxes and can use office expenses as tax write-offs.
To keep your recurring costs in check, always maintain a budget and promptly take action on areas that start to incur higher costs than they should.