It doesn’t matter if you’ve got a new startup business or an established one. In either case, one thing’s for certain: you want to spend as little as possible! Expenses are an unavoidable part of running any company, regardless of its size. The trick to remain profitable is to keep those costs down as much as you can.
One sad fact of business is that many firms go bust because they don’t have a handle on their costs. When staff have free reign on spending, it needs to get curbed. And any essential items you buy on a regular basis should also get bought cheaply.
Some of you reading the above paragraphs might think that means cutting corners. But, did you know that it’s possible to cut your costs without cutting quality? Keep reading and you’ll learn ten practical ways to slash your business expenses.
1. Reduce the cost of sales
In case you are wondering, I’m talking about the expenses you must pay to sell your items. These range from employees to manufacturing. You might not know it, but there are many ways to reduce the cost of your sales!
It’s worth doing an audit of your sales processes and find out which parts cost you the most. I’m willing to bet you can halve those fees by doing things a little different to what you do now!
2. Reduce your manufacturing costs
Do you sell physical products? If so, it’s likely that you also make them too! I recommend finding ways to cut down on your manufacturing costs. For example, it might be cheaper to outsource that side of your business overseas.
Even taking into account customs charges, you can often get a better deal abroad. Particularly in countries where the standard of living is much lower than in yours. Just make sure you don’t sacrifice quality, or you could end up making a big mistake!
3. Reduce your staff costs
There’s no denying that employees represent the biggest cost to businesses. Aside from paying salaries, you also have to pay taxes and HR costs. As you can imagine, a company with even just 100 workers has high staff costs!
One of the best ways to reduce those expenses is by not employing people direct. You can hire people on a freelance basis, for example. Or you could outsource some functions of your business to third party companies. For instance, you could use an HR outsourcing service instead of doing things in-house.
4. Reduce your insurance costs
Believe it or not, some firms seldom don’t review their insurance needs! They just accept whatever renewal premiums they get offered by their existing insurers. This is where you can save money and lower your expenses.
Just before a renewal, shop around for the best premiums on the market. You can then give those details to your existing insurer. Many times, your insurer will match or even beat those quotes to keep your custom.
5. Lease the things you need
One of the primary factors that contribute to a company’s demise is cash flow. If you often “sail close to the wind”, you increase your risk of bankruptcy. It amazes me to this day why many businesses don’t just lease the things they need!
In a nutshell, leasing is the same as renting something. We all know you can lease company cars. But, you can also lease buildings, computers, telephone systems and more. The result: you end up with a healthy cash flow.
6. Fire people that don’t pull their weight
In some situations, there are times where a person isn’t doing a good job. You end up wasting money employing them. And, they can also affect other areas of your business in a negative way too.
Sometimes you just have to be the bad guy and fire them. Usually, the feeling is mutual, and they don’t want to work for you. It’s better to resolve such situations sooner rather than later. Especially if you want to keep your staff costs down.
7. Promote remote working
When you have an office full of people, you’ll end up paying a lot of money for your premises. Aside from any lease costs, there are also the utility and management bills too. As you can imagine, the more people you hire, the bigger your costs!
One way to reduce those costs is by promoting remote or home working. It offers flexibility for your employees, and you can downsize to a smaller building. It’s a win-win situation in anyone’s book.
8. Find ways to improve efficiency
You might not think it, but there will be dozens of ways you can improve efficiency in your firm. For example, let’s say you receive dozens of deliveries each day.
Give your suppliers allocated delivery times. That way, you can ensure your warehouse staff are as productive as possible. If your suppliers miss a time slot, you can “fine” them by paying less for their invoices! Many large firms do this, and there’s no reason you can’t negotiate such terms too.
9. Automate repetitive tasks
Sometimes you will need to do an overhaul of your internal processes. One improvement you can make is to automate tasks that your staff have to repeat all the time.
A central computer database that serves many departments can offer a significant improvement. Take barcodes as an example. Scan one in, and it can trigger a set of actions across the system. Now your staff no longer have to waste time doing manual data entry work!
10. Don’t be a “Jack of all trades”
Last, but not least, focus on a particular niche market. If you diversify too much, you could end up wasting money. Why? Because you’ll have to spend more time and money managing your various operations.
Well, I hope you have enjoyed reading today’s article. Let us know if you have implemented any of the suggestions in it. And don’t forget to write to us if you have any other ideas for this page too!