Sometimes, improving your company’s profits is not about selling more but about knowing how to reduce purchasing costs. Consider implementing a good cost optimization strategy before you decide to spend more money on marketing, staffing, or a new team.
This strategy is especially recommended for small companies that are starting their activity. In the beginning, it becomes more critical to reduce costs (for example, in purchases) so that the Business does not end in the red and can take off.
In this article, we would like to give you a series of tips for SMEs to spend less money on their business purchases. If you put them into practice, there will be more money left for your enjoyment (or to save) at the end of the month.
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Tips To Reduce Costs In The Purchases Of Your Small Or Medium Business
They are intended both for businesses that are just starting (where it is essential to save on expenses as much as possible) and for mature companies that are simply looking for new strategies to optimize their costs. And, of course, these recommendations will also be helpful if you are a self-employed professional. Implement these strategies!
Optimize Your Providers
The most obvious and basic, but many still overlook it. Are you sure you have taken enough time to search for your suppliers? Especially when starting a business, you tend to work with the closest supplier to your locality or city.
Lack of experience makes you go as fast and close as possible. However, this does not guarantee that the provider is supplying you with the best prices concerning their quality.
Take your time, do a thorough internet search. There are providers of practically everything, with reasonable shipping rates to anywhere, and far away do not mean that they cannot serve you well.
It is convenient to search for them in directories, ad pages, social networks, etc. Don’t underestimate an underdeveloped website!
Providers often have outdated and outdated web pages.
Remember that your job is not to do marketing! Retail stores already take care of that. Sometimes, behind an unattractive website, a quality provider can hide.
It’s Not Just The Price
The merchandise price is essential but also think about the long-term savings. A very cheap supplier or wholesaler is of no use to you if later the products give problems, fail, break quickly, or are of poor quality.
If you have a lot of returns and complaints from the customers you sell to, that supplier will lose your money in the long run. Take this into account and look for a suitable relationship between quality and price.
Look at a supplier or manufacturer that responds well to incidents, warranty procedures and maintains good communication and service with the retailer. Another fundamental aspect is that you pack the merchandise well and work with good transport companies.
It is not pleasant to be organizing the stock and discover that there are things that arrived broken or in bad condition. Rest assured that these types of incidents will make you lose money.
Never let your guard down, and don’t stop searching for quality suppliers! Also, when your business is already running.
Also, Buy Abroad
The downside to this tip is that you probably need to speak English. If this is your case, do not hesitate to look at other markets both within and outside of Europe. Never be afraid to work with a foreign supplier! Sometimes you will have a lot to gain in terms of the quality and price of the merchandise.
An excellent strategy to reduce costs is to analyze if you can buy these services or products in another cheaper country.
If you work with European suppliers, remember to request your Intra-Community VAT Number at the Treasury. This way, the supplier will be able to sell you the merchandise without paying the VAT of their country.
Take Accounting To The Millimeter
Good accounting knowledge can save you more money than you imagine on your business purchases. Do you know the number of freelancers and SMEs losing money because they do not know what they can deduct? Don’t fall for this mistake!
If you run your business from home, for example, there are percentages of the rent, the rate of electricity or telephone deductible in VAT, and deductible as an expense. Other expenses such as fuel for business trips, meals with clients, or repairs to the premises or work equipment, are also tax-deductible!
Many freelancers and entrepreneurs do not know that they can include these issues as business expenses and end up paying more taxes to the Treasury. Ask for invoices for absolutely everything that you will use in your Business! A computer, mobile, charger, repairs, web maintenance services, business cards and brochures, translations, etc.
Soak up accounting well and keep track of all the purchases you can deduct according to your activity. At the end of the year, you will have been able to save a lot in taxes.
Any company or professional should issue you invoices. Remember to always request invoices for your purchases of products or services to deduct VAT.
Use Modern Cashback Apps
These types of curious tools are currently on the rise. The loyalty cards or applications Cashback are tools to recover money from your purchases.
They work like the classic point accumulation systems. Instead, what is accumulating is a percentage of the money from the purchases you make. The money you collect by using these forms of payment is 100% real and redeemable at your bank.
Avoid Loans And Debts As Much As Possible
A fascinating trip for new entrepreneurs and freelancers. Loans and debts carry interest that, in the long run, make you spend more money on purchases for your Business. Likewise, contracting debt with suppliers is not suitable for your economy.
Try, as far as possible, to finance your project yourself. Work and save to buy the things you need. When the Business is up and running, gradually invest part of the profits in improving it.
You can even put some of the new financing methods into practice without loans. An example is crowdfunding, where anyone can contribute money to your project if it is of interest to them in exchange for a symbolic reward. Or the Business Angel, in which you expose your project to a larger company in the sector, which finances it in exchange for future participation.
The exchange of services with other professionals is another way to save that also deserves your attention.
Take Advantage Of Promotions For Your Business Purchases
Offers and promotions are another way to save long-term. For example, hosting or web hosting companies usually offer their cheapest service by paying for 1 or 2 full years instead of monthly.
If you already know that your Business will always need a functional website, that offer is convenient because you will have saved it at the end of the year.
The same is the case with telephone and Internet services. Some companies offer promotions in which you contract the Internet and two phone numbers. Ideal for using one phone number at home and leaving the other to attend to Business.
Group Your Purchases
If you know that a product sells incredibly well, ask your wholesaler what discounts they offer for volume purchases. In this way, you will get more return on product sales. Whenever shopping from a supplier, ask if they have special rates for retailers or professionals.
The same can be applied to the assumption that you need to buy equipment for your company. For example, a computer, furniture, a table, some chairs, a desk or a printer.
It is recommended that you investigate if you can buy everything in the same establishment. What’s more, you will save, and you can buy all the material at once. You will save a lot of money on transportation costs.
Buy Only The Essentials
You should keep a record of all business expenses. Now and then, sit back and take a look and ask yourself: “Is this expense really necessary for the smooth running of the business?” or “Can I do this myself and do I have time for it?”
Stop paying for the most expendable things or look for cheaper alternatives. Regarding services, what you can do yourself and do not mind dedicating time to it, do not delegate it to someone else. This also saves money.
Find Ways To Dispose Of Unsold Stock
Several products remain in the warehouse in every store because they have not been sold.
However, did you know that companies pay you for your unsold stock? They are companies specialized in reselling liquidation stock. Find out, as it is an excellent way to reduce purchasing costs by recovering the money invested in inventory.