How To Slash Your Burn Rate In 2016

Guest author Scott Gerber is the founder of the Young Entrepreneur Council.

Cutting out unnecessary spending is always a good idea, whether you’re running a profitable business or trying to lengthen your runway at a startup. But how do you decide what is necessary and what is waste as you examine your business expenditures?

To help you figure it out, I polled 12 entrepreneurs from YEC on how they’ve applied leaner thinking to less-obvious areas of their businesses. Their best answers are below.

Look Into Other Options for Everything

Ask yourself a few questions. Would one higher-paid employee be more effective than two adequate employees? Would an electronic project management list eliminate daunting progress-report meetings? Are full-time employees as effective as outside specialized consultants? Look into other options for everything. Brooke Bergman, Allied Business Network

Remember That Fees Can Kill You

We’ve been working with a credit-card processor since we started. When I ended up looking at what they were charging, I felt I could get something better. I searched around and found two different processors who are currently getting me almost half a percent lower than I was getting. Talk about saving money! This is something we changed without cutting staff, making cutbacks or changing anything in our business. It’s saving us thousands each month. If you haven’t looked into what fees you’re paying and shopped around, stop what you’re doing now and start saving money. Peter Daisyme, Hosting

Tell Your Team What You’re Doing

Tell your team, “Hey, we’re doing just fine—we’re not in trouble or anything—but I think we’re spending a lot more money than we should.” Then ask them for their help in making the company more frugal, even in the small purchasing decisions. We did this recently and the results have been fascinating to watch. Our team is starting to take pride in finding bargains and making smarter choices, and it’s helping us become financially leaner without having to cut anything significant. Jesse Lear, V.I.P. Waste Services

Look Into Tax Savings

If you’re making a profit, you might want to get a second opinion on what else you can save in taxes. There are so many potential programs that can help reduce your tax burden, but not every accountant is familiar with them. For example, we make charity contributions, but our state refunds a large portion of the donations to schools in tax savings. So it’s a great way to give back to the community and save taxes. Wei-Shin Lai., AcousticSheep

Maintain Focus

Decide on the problem you want to solve and what you need to get there. Then re-evaluate anything that doesn’t align. Having a clear end goal and maintaining focus is the key to staying lean. Joseph Walla, HelloSign

Think About Your Meeting Locations

Encourage employees to have client meetings in your offices. You lose time and resources in their travel to an outside location—the cost to park (in an urban area especially) or to Uber to and fro. In addition, your company will likely pick up the tab at whatever restaurant the client picked if they decide to meet during a meal time. This easily turns what could have been a 30-minute office beverage chit-chat into a $150 or more excursion. Multiply that by however many of these out-of-office adventures happen per week, month, and year. Provide a room with a good vibe or an office booth space with a nice coffee machine and fresh juices. You can still provide a generative environment for discussion without the wasteful out-of-office variables. Faithe Parker, Marbaloo Marketing

Compare Metrics Among Staff

Within similar departments, I love to track productivity metrics. For those team members that produce more or finish faster, we sit down with them and gather best practices and then often have them train others to learn about some of these faster methods. They love the recognition, and other team members appreciate the advice on how to improve their work. Tamara Nall, The Leading Niche

Consider Office Costs

Office cost is one area where businesses tend not to be fully informed about the best ways to spend their money. Consider the total monthly cost of your office, and then factor in office conditions that may be contributing to ineffective work. For example, having slow Internet may be cheap, but it’ll cost you in the long run. Aron Susman, TheSquareFoot

Look at Your Shipping Bill

If you are an e-commerce business or one that makes physical products, shipping costs can often take a toll. Don’t just look at what you’re paying FedEx or UPS—consider the materials required to properly package your goods, too. It’s always good to keep an eye out on different services, platforms, and packages to help cut down costs in any way early on so you can use this small boost in profit back towards your business. Kumar Arora, Aroridex

Imagine a Killer Competitor

We often get stuck in our thinking because we’re too focused on our own business. Shift this focus by imaging what it would take to build a formidable competitor. Which resources would they need and which would be considered wasteful if they peeked inside your operation? Start with your team because salaries, wages, and benefits are likely your single biggest expense. Is your team optimally organized or would a competitor structure it differently? Move on to your advertising. Would your hypothetical competitor also be spending $25,000 attending trade shows or $2,500 sending out gift baskets? Now, let’s explore all those filing cabinets, printers and the ink you buy. Can you become a paperless office? Imagine how competitors would exploit your weaknesses and turn those into opportunities. David Ciccarelli,

Stop Subscribing to Every Software Service On The Planet

Every person I speak with has a software subscription of some sort that they do not use. It’s crazy! They feel that they will use it at one time or another but never end up doing so. Once charges are automatic, it’s difficult to take the time to cancel them. —Raymond Kishk, Interstate Air Conditioning & Heating

Look at Your Business Through a Customer’s Lens

Put yourself on the customer’s side of the situation, rather than the side of the business owner. Doing so can not only open your eyes to areas that can be improved but help you maximize value and reduce waste. By doing this, I realized I need to step out of the day-to-day and give my employees more power so I can focus on growth—which will ultimately mean better results for my customers. Alfredo Atanacio, Uassist.ME

Photo by aisletwentytwo

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