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How to cut costs and save money

How you can cut costs and save more
By Entrepreneur Staff |

In business, savings occur when you set aside money for specific purposes (like when you want to add to your operating budget or earmark funds for a big equipment purchase), when you reduce the costs of running your business, and when you become more efficient and more productive in your enterprise. All are important to master if you want to stay profitable or “in the black.”

According to Dr. George Matyjewicz, a global business strategist and publisher of E-Tailer’s Digest, a business has five major cost areas: labor, rent, inventory, equipment, and marketing.

“Reduce costs wherever you can,” Matyjewicz says in “16 Tips for Improving Your Bottom Line” on businessknowhow.com. “Save on the operation costs like rent and equipment, and you have more to spend on the things that make you money—inventory and marketing.”

Before you spend a lot of money on “fancy offices, fixtures or state-of-the art technology,” says Matyjewicz, consider other, less expensive ways. “Fixed expenses don’t make you money!” he adds.

Other ways that could help you save on costs, according to Matyjewicz, are: improve your collections, deposit daily, delay your payments or spread them out, and negotiate your taxes. You can also save on costs by becoming more productive and using your time better, he adds. For instance, if it usually takes you 40 minutes to serve a customer at your shop, try to complete the job in 30 minutes. “With less time to work, you can focus better—and you can add another client to your daily calendar. Same results, less time, more money,” Matyjewicz says.

Meanwhile, the best way to save money is “to buy only the stuff that is necessary,” says personal finance expert Armand Bengco, executive director of the Colayco Foundation for Education (CFE).

“Invest (money) in facilities where it could grow,” Bengco says. He adds that whenever you earn extra money “be it personal or from one’s business,” it should be put in good investment vehicles such as mutual funds, which is a collection of stocks and bonds managed by an investment company.

Mutual funds, Bengco says, are now starting to pick up following a “volatile interest rate environment” in past years at the height of the global financial turmoil.

“Mutual funds are good investment choices because it ’democratizes’ investments. One can put in just how much he or she can afford. He is not obliged to make additional investments if he cannot do so,” he adds.


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