When you dreamed of running a business then you probably thought of the freedom it would give you, the success and the fun things about doing something you love for a living. You probably didn’t consider some of the less glamorous sides of running a business, such as cutting costs, but these can be some of the more important things when it comes to having success and keeping your business operating at full capacity these are the kinds of things people will need to get to grips with.
So, what are some tried and tested ways to cut business costs? This guide will walk you through some ideas and hopefully spark some inspiration for your own business.
Ditch Physical Locations
Some businesses can do this, others can’t. If you run a high street store with no way of selling online then this piece of advice might not be for you. However, many people are in a position to not have an office and to have their team work from home. In the modern age this has become even more commonplace. So, if you are in a position where you can think about getting rid of office space then we recommend at least giving it some thought.
Do you have suppliers you could negotiate with? Think of this as an example; if you run a small coffee shop and your supplier sells you coffee at $5 a bag, and you are initially buying 50 bags a month, but eventually, your orders go up to 200 bags a month, do you think you should be paying the same? In this position, you might have more power to go back to the supplier and ask for a discount, with the possible threat of moving suppliers. These kinds of monthly expenses are often considered set in stone, but they don’t have to be.
A long look at the things that are costing your business money might be in order, and can lead you to an obvious conclusion for the best ways to cut costs. It is easy enough to find yourself forgetting about all the things that your business pays for monthly.
Think about company vehicles, for instance. These are a real luxury and in some cases, they are simply not required. It is far better to get rid of the fleet if you can. They cost money upfront, but running costs can be huge, plus they are a depreciating asset meaning that they only lose money rather than gain value. If you’ve decided it’s time to get rid of the fleet, selling a used car can also provide a little cash injection for your business, too.
Other expenses include travel costs and marketing. If you are running a marketing budget in your business then you should take the time to check that you are doing so in an efficient way. There are a number of businesses throwing huge sums of cash into marketing schemes which simply don’t work or provide any benefit. Analyze very carefully and make sure that every dollar spent on promoting your service brings some form of return. Otherwise, what is the point of doing so?
This is a matter of some contention, but ultimately the cost to your business is the main thing to think about. It is great to support local employment, but if there is a job or task you can outsource to somewhere further away then it makes a lot of sense to do so.
Business process outsourcing is a huge industry, mainly due to the fact that it has the power to save a huge amount of money in the long haul for the majority of businesses. Admin staff may not even need to be in the same state or same country. With remote working, there is also the option to outsource virtually.
In some drastic cases, a whole division or department of your business might be ditched in favor of outsourcing. For instance, if you have a marketing team and decide that you can save money by outsourcing the marketing services then this might be a decision you take for your business.
Check Your Debts
A great way to save money and not even have to make any sacrifices is to check your debts and restructure them. If you are paying large interest on one debt then it might be possible to consolidate this into a different type of business debt that can be repaid over a longer period and often with a lot less interest.
On top of this, if you have the income for your business then you might want to consider trying to pay off debts quicker as they can be surprisingly expensive and leave you in a worse position as a business. A lot of this comes down to being disorganized.
Efficient Strategies = Less Hours of Labor
Efficiency is not always seen as a way to cut costs, but it certainly can be. If you can streamline production then it stands to reason that you won’t have to spend as much time on creating the same output. Effectively, you have made each of your products or services cheaper for your business, and this extra time can earn you more or even cut down on staffing needs to save the costs for your business.
Every business is different and there may be specific ways in which you can make your business more streamlined that simply wouldn’t apply to some other types of business. For instance, you might be able to switch suppliers for a physical business that sells products, but to sell services this is less likely to be possible, or will certainly have to take a different form.
Hopefully, our six ideas for cutting business costs will have sparked some inspiration. Your business might feel a lot of loyalty to staff and spreading the wealth, but remember that business survival is even more important, and without your business, you can’t support others.