In December, small business optimism surged to itshighest level since 2004, with the number of owners anticipating better business conditions leaping 38 percent. Anticipated sales and expansion outlooks were also looking up 20 and 12 percent, respectively. But capital expenditures also increased for 63 percent of business owners, as they tend to do at year-end as tax season rolls around. As the first quarter progresses, keeping costs down is a priority for businesses looking to keep their budget on track in the coming year. Here are four ways businesses are looking to save money in 2017.
3-D Printing for Rapid Prototyping and Lower-cost Production
Among new technologies driving down the cost of business, one of the most promising is 3-D printing. By reducing the costs of making product molds, 3-D printing can cut rapid prototyping expenses significantly. For instance, Italian precision mechanics firm ZARE Prototypingcut expenses 50 percentby using 3-D printing. U.K. medical supplier Brightwake used 3-D printing to reduce its prototyping costs for an automatic blood transfusion machineby 99 percent.
3-D printing can similarly cut production costs, especially when companies outsource to companies that already own printing equipment instead of buying their own. For example,o-ring seal supplier Apple Rubberuses 3-D printing to provide customized designs for its clients, allowing clients to bypass the need for expensive in-house equipment.
Analytics-driven Business Decisions
Another technology helping companies cut costs is big data analytics. Analytics tools help companies save money by providing objective data to make smarter decisions instead of decisions based on guesses and intuition.
One place data analytics is proving particularly cost-effective is in marketing. Companies typically spend9 to 13 percent or moreof their revenue on marketing, with companies that plan to outperform competitors spending more. McKinsey research has found that applying integrated analytics tools canreduce marketing spending by 15 to 20 percent.
As marketing is getting smarter, so is advertising. Analytics tools help businesses track which advertising channels are generating the greatest return on investment and which are underperforming. Businesses are adjusting their marketing budget allocations accordingly to get a better return for their dollar.
One trend in 2017 is a greater shift toward online marketing. Between 2016 and 2019, Forrester projects that the average online marketing budget allocation will increase from 30 percent of total budget in 2016 to35 percent in 2019. Companies will spend the most on search engine marketing, followed by online display ads, including banner and video ads. Social media advertising will increase to 15 percent of online spending. Perhaps most importantly, mobile marketing will permeate all other categories of marketing, in recognition of the central significant of mobile devices in contemporary communication.
Saving on Taxes
Businesses are also findingways to save on taxes in 2017. One way companies can cut tax-related costs is by outsourcing to a tax preparation company that uses cloud-based accounting software instead of hiring a full-time accountant. Cloud-based software enables much financial data to be captured electronically and automatically synced with books, reducing the number of bookkeeping hours needed for tax preparation and thereby cutting costs.
Current tax rules also offer businesses a few ways to cut expenses. If you drive to work, your travel expenses may be deductible. The IRS has announced that standard mileage rates for 2017 are53.5 cents per mile for business miles driven. If you work from home, you may qualify for a home office deduction. See theIRS websitefor qualifying details.