When you’re a leader, it can be easy to get caught up in the day-to-day hustle and forget about your business goals. It pays to take some time out of each week or month to think strategically about what you want for your company and how best to achieve that goal.
Making good decisions and using your resources wisely will increase your profits and help you expand your business.
The five cost-cutting tips listed here are just the beginning of what you can do to get your business increasing profit. Remember, these strategies take time and patience before they start working for you. But as long as you stay vigilant and committed to following them, your company will be better off than it was when you started this process.
1. Think Twice About Your Advertising Budget
Many businesses spend a lot of money on advertising; however, you can save some cash by only running ads for your new product, and by not running them all the time. You’ll be able to cut costs significantly if you run advertisements only when you’re about to release a new product or offer something different from what you usually sell — for example, a new training course or a new vape juice flavor.
Consider moving away from traditional marketing methods and exploring new tools such as ads on social media. These let you target specific age groups or geographic locations and ensure that more potential customers are seeing your ads.
On the other hand, if it’s been a while since your last promotion, then now is the right time! Get back out there with an ad campaign so customers know about your latest products or services and can invest in them again. This will improve customer value management and help grow sales while saving money as well.
2. Save on Purchases
When ordering office supplies take advantage of buying in bulk, which will lower prices and reduce waste. Be careful to buy only how much you can consume in a short period. Depending on the size of your company, 100 sets of pens and paper will lead to waste as items become lost or damaged in inventory.
Consider switching internet or phone providers; now might be the time to switch! Especially now that conferencing calling is so important to businesses and organizations, it’s worth it to invest some time into researching what other companies charge so that you don’t end up overpaying.
There are many ways to cut costs on purchases. If your company can do without a purchase, put it off until necessary. Only purchase what is needed for your business to function smoothly, and seek at least three quotes when purchasing new goods or services.
However, don’t sacrifice quality, as this could lead to unexpected expenses down the road.
For example, if you are getting a part manufactured through a CNC machining service, only select the necessary raw materials. Using cheap materials can cost your company in the long run, so choose raw materials that fit your budget and are able to meet your design requirements. CNC prototyping can be performed with inexpensive materials to reduce the cost of design iterations.
For recurring purchases and services, many companies offer loyalty discounts, so it can help to always ask for a discount. Not all discounts are advertised, and if you build a good rapport with other businesses they’ll want to keep you as a recurring customer.
You can also negotiate payment terms and receive discounts for paying within a shorter time frame.
After you’ve made purchases, keep track of late payments and cut down on late fees. Make sure your accounts payable department is checking each invoice for accuracy and asking for credit when it’s due. Invoices can have errors on them, so it’s important to check that the services and goods purchased match what was received.
3. Consider Outsourcing Some of Your Workload
Outsourcing some tasks can also save your company money! This includes things like customer service or accounting, which are often outsourced overseas where salaries may be lower and labor costs are cheaper.
Sometimes, outsourcing overseas might not be an option for your company. Consider hiring a virtual employee in your area who is familiar with your industry and region. Remote workers can save your company money by reducing office costs and allow for a wider pool of selection.
Some business owners might be worried that if they can’t see their employees in an office, then they cannot guarantee their employees are working. On the contrary, you can simply assess how a remote worker is performing by the work they produce.
Instead of a variety of personal factors influencing your opinion of them, their quality of work is the major defining factor.
There are freelance sites available where you can hire workers for short-term tasks like editing or website development. Hiring a freelancer can offer cost reduction from hiring an agency, and it eliminates the middleman. Consequently, you can save money on salaries and benefits, which can be invested in other parts of the business.
4. Streamline Processes by Reviewing What You Do
Consider what you do, and how often.
A lot of people tend to overthink small projects because they don’t want to miss any details. But if it’s really not that important then streamlining and relying on the work of others will be a better use of your time.
Small projects won’t contribute as much to your bottom line, so focussing on your major projects will help your company actualize more significant cost savings.
To determine opportunities where your company can save, you can outline each day-to-day process in the company and the associated costs. Make sure to compare your expense budget with company sales. Consider creating forecasts of sales and expenses to see where your company is going in the future with current trends so you can plan ahead.
Regularly reviewing where your finances are benefitting you the most will give you insight into what processes are most profitable — and which processes can be improved.
Improving the daily workflow of your workers through effective project management will help keep them more efficient and can save you money. Start by assessing all company meetings and calculating the cost of having all the requested employees present.
Evaluate the reasons for each employee requested to attend meetings to make sure only essential people are invited. Then, re-evaluate the cost of having everyone in the meeting present versus the benefit of the meeting.
Sometimes, what is scheduled as a meeting can really just be a quick email! If the meeting is primarily about information sharing, you can even send the information ahead of time to give employees a chance to review beforehand. This will keep meetings short and to the point, while ensuring vital information is shared.
5. Hire Inexperienced but Promising Employees
Inexperienced employees may not yet have enough experience to know the best ways to save your company money. That shouldn’t be a problem! They can still offer a new perspective on how things work and will be more flexible than their experienced counterparts, which is important if you’re looking for someone who is willing to put in extra effort to jumpstart their career.
These employees can grow with your company and save you money in the long run by reducing hiring costs.
A lot of employers are hesitant about giving inexperienced people responsibility because they don’t know what that person could do wrong or mess up. But it’s key for these workers to learn from mistakes.
Give inexperienced hires increasing responsibilities so that they are ready to tackle the next challenge. If you start them out small, they can gain confidence to perform more complex tasks.