Your grandparents were onto something – small cuts now can add up over time and turn into significant savings. Take Warren Buffett’s famous frugality. Though his net worth exceeds $65 billion, Buffett still lives in the home he purchased in 1958 for $31,500.
As you dig into your own spending habits, you may discover needless expenses that can add up over time and impact your bottom line. Here are five common ways you could be wasting money without realizing it.
1. Brick-and-Mortar Office
You may have a killer office space, but have you seen clear evidence that those pretty hardwood floors lead to more signed contracts? Businesses like Happy Cog have transitioned to a distributed office, and they are still just as effective.
In fact, the latest research shows that half of all employees will work from home by 2020. If giving up your office is an option, you can work with your team by using technology like Skype, Slack and Google Hangouts and rent a conference room when you need to meet face to face.
2. Sneaky Charges
Do a quick review of your monthly expenses (and make sure they’re all accounted for in Pulse). Maybe that membership to PRWeb made sense in the early days, but there are plenty of other ways to get your name out there.
Look at your regular expenditures and think about which ones haven’t made a meaningful impact on your business in the past six months. Here are some of the usual suspects:
- Software subscriptions
- Professional groups
- Web services
- Domain registrations
- Subscriptions that auto-renew
- Magazine subscriptions
- Extra phone lines
When you sign up for a new membership or service, set a reminder in your calendar for six months later. If you haven’t seen the value that you anticipated, cancel your account before it auto-renews.
3. Find Everyday Discounts – Without Cutting Coupons
Look for proactive ways to save by considering switching to other companies that offer better deals on the products or services you’re using. Let’s say you spend $50 a month in bank fees. If you switch to a new bank that offers free checking, you could save $600 a year. Look for other ways to save by bundling services (like your internet and phone services) or getting discounts for setting your bills to auto-pay.
4. Pass Along Costs
Chick-fil-A’s average per-store grosses were $3.18 million in 2012. Sure, it was their pleasure to serve you, but those profits came from a significant markup on the cost of raw materials.
Think about one of your standard projects and total up all of your recurring costs. If your expenses come out to $900 per job, tack $900 onto the project total. Revisit your profit margins, and you may discover that you can save money by passing the costs on to your clients or vendors.
5. Difficult Clients
There’s one more thing that isn’t going to show up on your bank statements – difficult clients. Do you have a client that calls at night? One who always pays late? A know-it-all who talks down to you and bullies your team? Maybe it’s time to fire the bottom 20 percent of your clients (or at least the worst one). What you lose in cash you’ll make up for in morale and the newly acquired freedom to land better clients.
When you find creative ways to cut unnecessary expenses, you’ll have more cash on hand to invest in your future.