7 Techniques to Cut Down Business Costs
There’s no doubt about it: money helps make the world go round. This doesn’t mean it’ll be easy to afford everything you want for your business, however, there are some tips you can use to help trim the fat during those rather lean times.
1. Reduce Supply Expenses
American Express says you can save money on office supplies by contacting vendors and telling them you’re price shopping. As you do so, make sure to consider large discount suppliers like BJ’s, Amazon and Wal-Mart. Oftentimes they can beat traditional office supply vendor prices.
2. Lower Financial Expenses
Look for places to save money on insurance policies and financial accounts. Here, you’ll also want to shop around. It’s also a good idea to consolidate insurance policies and bank accounts when possible. Also, make sure you’re not over-insured or duplicating coverage. While you’re at it, do a thorough cost-benefit analysis and future forecasting, especially if you’re considering expanding your business. You’ll want to see how all these things will affect your cash flow. Remember, excess debt affects your company’s rating, interest rates, and ability to borrow money in the future.
Here are a few other ways you can cut costs:
- Spend less money on office space by moving to depressed office space areas or negotiating better, long-term lease conditions with your current landlord. If you don’t need a physical office, consider going mobile as this will save money on insurance, business taxes, and utilities.
- Cut down on staffing costs, especially during slow periods. You should also use family members and acquaintances in your business when possible. This is a great way to save money since they’re a fully deductible business expense.
- Consider bartering for the goods and services you need. You may be pleasantly surprised to find numerous opportunities here for great success if both parties fulfill their obligations. When conducting service-for-service exchanges, make sure you establish an agreed upon time. Also, remember that bartering is treated like any other transaction when it comes to taxes.
- Reduce the amount of money you’re spending on business vehicles. Fuel and servicing costs are expensive – especially when dealing with larger vehicles. You can save money from the very beginning if you buy used. Also, if you plan to drive a lot, consider buying a hybrid vehicle.
- Find ways to cut down costs for supplies. To do this you must first learn to continually monitor costs, watch for discounts (don’t be embarrassed to ask for them too), and look for alternative ways to get the things you need. Always paying your bills promptly can also really help you here. Additionally, you may wish to look for a co-op in which everyone can share expenses for the goods they need.
- Look for ways to spend less money on advertising. This is important because about 5% of your revenue is probably spent on advertising. If you’re a service business, you probably spend even more money. However, online advertising doesn’t have to be this costly. Try using social media, placing cold calls, asking for referrals, and always having business cards available to share – all great ways to increase your marketing profile.
3. Modernize Marketing Efforts
Don’t eliminate paid advertising if it’s working. However, you may wish to consider cheaper alternatives. Some things you may want to consider doing include:
- Build your customer e-mail list and implement a referral program because word of mouth advertising is far more likely to result in a sale than traditional marketing.
- Network more and advertise less since clients are more likely to hire businesses they recognize.
- Consider cutting marketing costs by doing more in-house.
- Reduce traditional marketing, opting instead for a larger social media presence.
4. Use Efficient Time Strategies
By being more productive in an effective way you’ll spend less money doing business. To make this work you must make efficient use of your time. Here are a few tips to help you do this:
- Use apps like Focus Booster and Rescue Time to minimize distractions.
- Limit access to time wasters so you can concentrate better.
- Use software like Paymo and Toggl to track employee time usage so you know how many billable hours they have.
- Set up expectations stating that your employees have a reasonable amount of time to complete certain types of activities. Offer incentives for meeting or exceeding those expectations.
- Schedule business activities.
- Encourage employees to adhere to daily or weekly schedules.
- Schedule a predetermined block of time for meetings and make sure everyone knows they’re to be on time. Once you start the meeting, stick closely to your agenda so you end at the appointed time.
5. Harness Virtual Technology
When you use virtual technology, you reduce business costs. For instance, by hosting virtual meetings you’ll spend less time traveling. Virtual offices can also eliminate the need for physical space. Other technologies like Google Drive centralize your company’s documents and product collaboration.
6. Focus on Quality
High-quality products and services sell. If your customers are satisfied, they’re more likely to buy more of these items from you. Creating a solid reputation for your business will also allow you to charge higher prices, make more money, and improve your bottom line.
7. Switch to the Cloud
Cloud-based phone systems are a great way to reduce capital costs and ongoing expenses that are related to IT services. This is because you no longer need to buy and maintain expensive servers on-site or pay for ongoing software upgrades. Instead, you always have access to the latest versions of business applications and the flexibility to increase your bandwidth or storage on demand. As an added benefit, your cloud provider also takes care of most of your data recovery issues, which frees your business up from having to maintain a complex IT disaster recovery plan.