Essential Tactics For Slashing Small Business Costs
How do small businesses make money anyway?
Well, part of the equation is selling enough of their product or service, something that is done through smart marketing, effective advertising and talented salespeople. However, the other aspect that contributes to being in profit, that is so often neglected is minimising business costs. After all, if it costs less to produce the product or service you are offering, then it will be easier to get those figures into the black. With that in mind, check out the essential strategies listed below that can help you slash costs in your small business.
The first tactic to consider when you are looking to reduce the operational cost of your business significantly is outsourcing. Now, some people may be under the impression that searching for outside agencies and workers to complete tasks can be expensive. Of course, it’s not free, but sending a task to an expert that you pay on a project basis can help you to save some serious money.
The reason that outsourcing can be a much more cost-effective option all comes down to time. Think of it this way, your time may be worth £20ph, and yes, you could go online research the task, teach yourself and compete it but it would take you 10 hours in total to do that.
However, if you sent the task to someone that was already an expert and it cost £20 an hour you would make a saving of £100, see what I’m getting at? What you need to think about is whether you can afford the investment of all the additional time it will take for you to learn how to do the task before it can be completed? The answer will usually be: ‘probably not,’ if you are in charge of a small business, as it’s likely that your time is already in demand, so consider outsourcing instead.
You cannot get away from the fact that some items need to be bought if you are in business. However, there are also a considerable number of things that you do not need to buy outright to run a successful and profitable company.
One of these things is vehicles. Yes, you may need to provide cars for you sale team so they can zoom about the country and convince potential customers to buy, but you can save money by leasing these vehicles instead of buying them outright. Also whenever anyone requests an upgrade or has a breakdown all the hard work will be taken care of for you, something that will save you additional money regarding administrative costs.
Next, have you ever consider leasing your office equipment and furniture instead of buying it all? Well, this is possible as many companies offer this service. In fact, doing so can not only save you money instantly because you don’t have to find the collateral to pay for everything in one go but can also help you out in the long term.
How this works is much like leasing a car, in that when you need to get the latest version of a piece of equipment you can quickly and simply replace items with minimal cost and hassle.
Lastly in term of leasing, don’t forget that most businesses do not buy their commercial premises, especially if they are office, shop, or factory based. What this means is that there are plenty of excellent business locations available to rent. Again something that can make managing the cost of your business a lot more viable, and by doing so can even save you money as you can compare sites and negotiate a price before agreeing to your lease.
Buy in bulk
It is also important to realise that there are some things that a small business will have to buy rather than lease. This is something that often depends on the type of business that you are running.
For example, office-based business will need to stock up on paper, ink, envelopes and all the other trimming of administration. However, a small hotel or B&B business will need to purchase essential like these hotel contract beds, as the wear and tear on rental would be too high. However, it is also worth noting that it may be possible to subscribe to a bedding service that provides things like sheets and pillowcases for a flat fee, something that works on more of a rental type basis.
Now, the secret to buying such items in a cost-efficient manner is buying in bulk from a commercial provider. Firstly, this is worthwhile because discounts are often available if you buy more than one unit of items together at the same time. Secondly, by establishing a positive relationship with a bulk supplier you put yourself in an excellent position to negotiate further discounts for any additional orders. After all, a supplier will want to keep your business, especially if you are ordering in large amounts.
Next, it may seem like a simple piece of advice, but slashing business costs is no good unless you keep a record of the actions you are taking and the saving you are making.
To do this, you will need to have information on the company expenditure before any cost-cutting measures as well as after. These can then be compared to one another to check that the savings are panning out in the long term.
Environmental friendliness is a big PR and selling point for many small businesses that endears them to their customer base. However, it is also something that can benefit them in another way, and that is by saving them some money.
How this work is that the main idea behind being eco-friendly is that you take measures to stop putting such a significant strain on the natural environment. For most business, this means reducing their energy consumption and waste by-products.
Of course, things like energy and resources cost money so by reducing your business’s use of these you will be cutting back on your costs as well as saving the planet. Something that makes it a win-win situation!
Last, but not least, as technology advances there are some ways to apply this that can save your business money.
In particular, automating things can reduce the need for human attention, and somewhat controversially, wages, as well as freeing up your employees to do other tasks that are valuable to your bottom line. In fact, automation is set to become one of the most significant trends in business over the next 50 years in both the real and online worlds.
In the real world, businesses will be able to automate production, packing, and shipping tasks with robots. Payments, security, and information and assistance seeing are all area that areas likely to see further automation development as well.
Of course, concerning the online world, we already see the first glimpses of automation in the personalisation of particular adverts and content online.
This type of automation is a development that can not only help your business to close more sale because the information you’re providing a potential customer is more relevant, but can also save your company money too. The reasons being that the complicated task of managing such content will be given over to the automation process, something that means the cost overheads of paying staff to do such duties can be quickly reduced.
In summary, don’t be intimidated by the task of slashing the operational costs of your business, as by following the advice above you can complete this task quickly and effectively. Something that means your profits will soar, as your costs are slashed.