Increasing sales and revenue is a necessity on the path to profitability. Another way to grow your bottom line is to look for ways to streamline your business operations and trim unnecessary expenses. If you need some help pointing you in the right direction, let’s consider many different areas to get more efficient in the coming months.
It may be the small things
In his Money Crashers blog entry “26 Cost Cutting Ideas for Your Small Business to Reduce Expenses,” Brian Martucci starts off his detailed article with this consideration: “According to Bloomberg, 8 out of 10 small businesses fail within the first 18 months.” While there can be many different contributing factors to this fact, and increasing sales is often seen as more critical than lowering expenses, the reality is, they both go hand in hand.
While this list is long with so many great ideas, we’ve narrowed each tip down to the quick highlights, included below.
Know your ideal profit margin: Beyond revenues and expenses, understand what your profitability should be. Reducing common expenses will help expand your net profit margin. Speaking of that…
Reduce your utilities and overhead: Without compromising comfort, smart programmable thermostats can cut your climate control costs, especially at times where people aren’t in the building.
Rely on passive energy-saving steps: Paired up nicely with the new thermostat consider investments into materials like double-pane windows, light blocking curtains, solar water heaters, energy-saving appliances, and building maintenance like the improvement of air space seals. And, be sure to see if any of these materials qualify for a tax credit.
Turn the power down: Cut down on electricity and turn off anything like lights, machines and appliances after everyone goes home. Make sure your employees are on board with this too so you aren’t responsible for everyone!
Cut down on paper: Paper goes quick in a company and it can be very pricy, not to mention bad for the environment. Instead, use electronic files when possible, print double-sided files, reuse paper for notes, and request electronic bills from your vendors.
Get smarter about your plans: Nearly every organization has a lot of monthly or annual plans, ranging from cloud service, to legal advice, to cell phones, to accounting. Do you need all of this? Or, can you bump down to a cheaper plan that will still cover all your needs? There may be some great cost savings here.
Offer telecommuting: Telecommuting on the rise and employees want this. Not only can you boost productivity rates and morale, but you can also lower various overhead costs and travel costs by accommodating a more flexible off-site work team.
Utilize your space: The dedicated office space footprint per employee continues to shrink and it’s no wonder when you look at new collaborative workstations, dual-purpose office rooms, and mobile accessibility. Think about how you can make your space work best for your company, and think outside of the box to do it.
Consider healthcare changes: Healthcare plans are getting more expensive for employers so do your homework to see what’s out there in terms of higher-deductible plans and more affordable options.
Replace legacy systems: It’s easy to become outdated with legacy systems so take a close look what’s around you and consider upgrading your phone lines or toss your fax machine.
Embrace gently used: If you can score some high-quality used equipment (printers, laptops, storage materials, and even vehicles), go for it!
Pay early: Many vendors offer a nice incentive if you pay early, so if you can swing it, find out what discount you can get with moving up your payment a few weeks.
Barter: Yes, this tried and true practice still exists – online and offline – but see if it makes sense for your organization and your industry.
Leverage social media: While traditional advertising may be out of your budget bounds, paid social media is much cheaper and can deliver big. And if you can’t even afford that, utilize your free networks on your social media sites and grow your business organically without a deep pocket dive.
Encourage word of mouth: Depending on your demographic, you may have a very powerful brand ambassador team behind you. Whether it’s the establishment of sharing forums or referral programs, encourage them to speak on your behalf.
Praise effective time management: If you really want to impact your bottom line in a big way, crack down on procrastination in the workplace and put the value on smart working strategies, especially if time management software can help your employees and organization.
Bring on freelancers: If you have some extra work on hand, it may be smarter to bring on a freelancer or independent contractor to get the job done, without all the expensive benefits.
Invest in your workers: Whether it’s your employees or long-term contractors, retain the good ones, especially since recruitment and hiring costs can be much more expensive to take on.
Reward smart spending: If you have a credit card that gives cash back, spend it on some responsible spending items like needed equipment and inventory.
Watch out for interest: If there are ways to avoid it, look for offers and startup capital that are interest-free to help you in the long run.
Control your location costs: While it’s not always possible, be sure to consider the different costs associated with different locations since some spots are much more expensive than others. And if you can, try negotiating a lower rental rate on a longer-term lease.
Join forces with other small businesses: If it makes sense to pair up with other similar businesses for supply or inventory purchases, it can be a potentially big cost saver. Trade associations, resource libraries, and local business networks can help point you in the right direction.
Be careful with bulk: While it’s tempting to go big with supplies, truly consider if you need that much of it. If you don’t, spend wisely and go for the smaller quantities.
Consider the merit system: While employee perks and fringe benefits may seem necessary to attract talent (i.e. daily catered lunches on the house), they can really add up over time. Instead look to invest in better pay, benefits, and bonuses that can be better accounted for and more sustainable.
Shop around for services: When it comes to companies in competitive industries, like insurance, put the competitors against each other and get the best possible deal that will help you.
Minimize travel expenses: Travel racks up fast. While you do need some offsite in-person events, balance it out with teleconferences and calls for the meetings that don’t need the face-to-face element.
What is up ahead for you?
As you look at your organization and consider these tips, what are the top five changes you are planning to make in your organization to cut costs and increase your efficiency?
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