5 Simple Hacks to Reduce Business Costs
No matter the size of your company, reducing business costs should be on your priority list. Decreasing additional expenses helps to increase profits and improves cash flow in the company.
82% of businesses fail because of cash flow problems. So how do you plan to reduce costs in your company efficiently?
Here are the five best yet simple hacks to help you reduce your business costs:
1. Employ Remote Working
Remote working is one of the best approaches to reduce business costs. 43% of employees want to work from home most of the time. It indicates that by employing remote working, you will also be able to improve employee satisfaction and retention rates. Both of which can diminish the need for hiring and training new talent.
Here are some ways remote working can help you reduce business costs:
- Rent and utilities: The average real estate savings with full-time remote workers is $10,000 per employee per year. When your employees work remotely, you save a lot on rent and electricity. In the future, you could move to a smaller office, further reducing the office rent.
- Cleaning services: When you don’t have enough employees in the office, cleaning services expenses will likely reduce.
- Food: Whether you provide refreshments during meetings or a cafeteria service, you can eliminate this cost by employing remote working.
- Improved productivity: Telecommuters work 1.4 more days each month (or 16.8 more days every year) than people who work in the office. With more productivity comes more revenue.
2. Leverage Technology
Businesses that use the right technologies see an increase in productivity, speed, and a reduction in business costs.
By adopting automation, employees spend less time on tasks that require hours to complete, if done manually, such as data entry and creating reports. Besides, automation reduces the chances of error.
Here are some types of technologies that you can implement in your business to reduce costs:
- Cloud computing: Cloud tools like AWS allows you to store and access data from the internet, instead of your computer hard drive. It eliminates the need for purchasing software or hardware and hiring IT personnel to manage them.
- Employee scheduling: Software for rostering like Deputy not only free up your time, but it also helps make better use of it. Deputy’s AI-powered auto-scheduling reduces unnecessary wage costs with accurate labor forecasts.
- Customer relationship management software: CRMs like Hubspot help you manage customer data, interactions, and sales pipeline from one dashboard. It helps eliminate misplaced invoices or multiple software to manage customer data.
- Webinars: When compared to seminars, webinars save you tons of money. You won’t have to book venues, travel, arrange foods, and accommodation to connect with your target audience. With an effective webinar, you will be able to convert more leads.
Also, look for free apps and tools whenever possible. There are various free, equally effective alternatives to almost every major software. For instance, Google Analytics is enough for most businesses. You might not need to invest in tools like Kissmetrics or Serpstat.
3. Consider Outsourcing
Businesses all over the world are switching to outsourcing. It eradicates the need to pay for additional benefits to employees, such as insurance, pension, paid leaves, etc.
Here are some more reasons outsourcing can benefit your business.
- Better talent: Outsourcing enables you to tap into the pool of experts across the globe. When outsourcing to an agency, consider a niche company. They focus only on the thing you need and have the right talent, meaning your work will be done in a much efficient manner.
- No training and recruitment expenses: You won’t have to spend thousands of dollars running recruitment drives or training newly hired employees. When you outsource your work, you will just have to pay for the services you need.
- Fewer employees: With in-house teams, you don’t only pay to the staff, but also to managers handling them. By outsourcing, you won’t have to pay salaries to managers, thereby reducing your expenses.
4. Reduce Dependency on Paid Advertising
Almost every business uses paid ads to drive traffic to their website and increase sales. While it is an efficient way to attract customers, it is not cost-effective, especially when you rely entirely on it. If you stop paying for ads, your only source of leads will end.
Therefore, to reduce business costs and attract potential customers (regularly), you must focus on other channels, such as:
- SEO: Search engine optimization increases the possibilities of your website, appearing on the top of the search engine results page. Besides, SEO provides better results in the long run (even if you stop doing it) and can help stay ahead of the competition. Though you need to invest in SEO, the cost of it is less.
- Email marketing: For every $1 invested in email marketing, you can expect an ROI of $44. It means you will not only reduce business costs but also generate higher revenue with email marketing.
- Social media: With more than 3.6 billion people using social media, it is a great platform to enhance your online presence and attract customers. Though you need a social media marketer to handle your accounts and bring desired results, the cost will reduce over time.
5. Keep Track of Cash Flow
Lastly, it is essential to keep an eye on your business’s cash movement. It includes analyzing everything that’s bought or paid by your company. When you know where exactly you are spending, and how much, you will be better positioned to reduce business costs.
Here are a few places where I think every business can cut down expenses:
- Travel within the town
- Office stationery
- Entertainment and meals
- Credit card dues (by paying early)
- Electricity bills (by using energy-efficient appliances)
- Equipment and furniture (by buying used ones)
Also, consider creating a cash flow statement every month to better understand and eliminate unnecessary expenses.
Reducing business costs has a direct positive impact on the company’s profits. The more you save, the more profitable the business will be. The five hacks mentioned in the article are easy to implement and can bring the desired results quickly.