How To Save Your Small Business Money in 2023
Focusing on increasing revenue will always be a worthy focus for small businesses but finding ways to cut expenses and save money is also essential to maintaining profitability.
Inflation and rising costs impact many small businesses, enough so that nearly 6 in 10 (58%) report exploring ways to cut costs within the last six months, says Nationwide.
The study says that some of the more drastic measures include business owners using personal savings to support their business -- 38 percent of those surveyed report doing this.
Also, 22 percent told the survey they have canceled/postponed a significant business investment as a cost-saving measure, the insurance company said in a post for Advisor News.
Here are several ideas on how and where your small business could save money in the new year.
Reduce Your CCC
Your cash conversion cycle (CCC) is a metric that shows the number of days it takes for your business to convert inventory into cash, and what you want to strive for is as low a CCC cycle as possible, advises a QuickBooks post.
"As a business owner, you always want to strive to make sure that your business can get paid before paying its expenses," entrepreneur Marcus Cook writes in the article.
"The lower your cash conversion cycle, the longer you can wait to pay your suppliers."
writes Cook, co-founder of the blog and podcast The Success Bug.
So, he advises, when negotiating contracts with your vendors, see how long you can extend your days payable outstanding. "Conversely, with your buyers, see if you can push them to pay you as soon as the sale occurs."
Finding new software could help save money in several areas, including staffing issues.
"Wage inflation and a shortage of qualified employees are compelling many businesses to add technology that can reduce labor requirements," says Ben Johnston, COO of alternative lender Kapitus, in a Forbes post.
For example, you could add software that facilitates order taking, payments, inventory management, and accounting, says the blog by Rieva Lesonsky.
"Manufacturers are developing robotic and 3D printing technologies, while other businesses are looking overseas to secure clerical and call center roles at lower costs," Johnston adds.
Negotiate Insurance Coverage
You can lower costs by negotiating your insurance costs for your small business in 2023.
It's a step indicated by most of the small business owners in the Nationwide survey, with 84 percent saying they have reviewed or plan to review their insurance policies soon as a way to manage expenses.
"As they look to reduce operational costs, 51 percent of business owners say they would be likely to decrease their business’s current insurance coverage or limits to cut back on spending if a recession occurs," according to the Nationwide press release in October.
"This may be because 52 percent expect their premiums to increase over the next six months."
Review Credit Card Processing
Small businesses that take credit cards should look at how much they're paying their processor -- you may be "giving up cash you desperately need," says attorney Bethany Laurence in a Nolo blog.
The complicated menu of charges quoted by banks to handle different types of credit cards can be confusing and time-consuming, making it difficult for busy merchants to compare prices, she says.
But as a general rule, small businesses can save a significant amount by soliciting bids and buying their own processing equipment, adds Laurence, senior legal editor at Nolo.
She also suggests asking around to see what other small business owners are using or checking with an industry group, either of which may steer you toward a less expensive option.