In an economy with so many uncertainties, a slight reduction in expenses or even the smallest increase in revenue can significantly impact company profitability. It is vital to increase sales, deliver excellent services to customers and reduce cutting expenses to achieve and maintain profitability,
Although eradicating cost completely is not feasible, reviewing your spending and overall expenses can make a significant difference in your business. Cutting costs involves reducing the operation cost while providing goods or services to your customers. By cutting extraneous costs, you can apportion funds to other areas and boost cash flow.
This article discusses practical ways small business owners can cut extraneous expenses quickly to improve cash flow.
Below are some useful cost-cutting solutions that have been proven to work for business
Use Coworking Office Spaces
As opposed to renting or buying a traditional office, shared offices are cheaper and help save a significant amount of cash. With Coworking offices, you only have to pay rent without worrying about furniture because the office is already outfitted and decorated. Utilities like internet and electricity, and facilities like toilets, kitchens, meeting rooms and break rooms are shared facilities taken care of by the coworking office provider. This will save you big bucks.
Additionally, Coworking offices have employees like receptionists and administrative staff who can perform certain tasks you need without you having to employ or pay wages to them. Apart from alleviating financial burdens, coworking space encourages creativity. At a shared workspace, your employees and even you will be surrounded by other motivated members and like-minded entrepreneurs, thus creating an environment of creativity and productivity.
Opt for Social Media Marketing
If marketing is taking a large chunk of your budget because your business relies heavily on ads to get new clients and marketing, then you might want to shift your focus to online and social media marketing.
It’s no secret that social media marketing is essential for any business in today’s day and age as the use of social media platforms like Facebook, Twitter, Pinterest and Instagram to attract potential customers have increased.
Compared to traditional marketing and advertising, social media marketing gives you more bang for your buck (faster results with less money), thus reducing the expenses for advertisements.
Reduce Supply Costs
Supply cost eating a huge chunk of your budget? First of all, start by tracking the usage of all the supplies. This allows you to see the supplies that are truly needed thereby helping you shorten the list of necessary supplies. It will surprise you on how much money you can save with a change as little as trimming the supply list. The money may not seem large but will add up to a lot of money in the long run.
Always try to look out for the lowest price available when shopping for supplies. You can try to negotiate reductions on the cost of purchased products with your current supplier or find a new supplier with better terms. Alternatively, you can get great deals from online retailers like Amazon and Walmart.
Evaluate Your Insurance Costs
Review the insurance service you regularly use to ensure you are getting the most competitive and comprehensive deal available. Ensure you evaluate your insurance policies to confirm you are not over-insured or duplicating coverage.
Adjusting your coverage without compromising your protection can save you thousands.
You can also take advantage of the many insurance companies that offer bonuses or discounts or join trade and business associations with membership fees priced reasonably. Often trade associations facilitate setting up deals for bulk discounts on insurance.
Use Space as Efficiently as You Can
You might be spending heavily renting a large that may not be fully occupied or under-utilized. Redesign your office around space-efficient principles. As an example, you can use some of your office space for dual purposes. Your seminar room can double as your break room or you can combine storage and printing.
Also, sublet spaces you are currently not using to another business or individual. The income will serve as an additional source of revenue for your business.
Hire an expert
Although this may seem counterintuitive, hiring a consultant might be a great way to cut expenses. Particularly if you do not have the time or in-house expertise to review, analyze and check pricing alternatives. A trained professional will help you look into the books and figure out effective ways to cut costs, improve and negotiate contracts, find and recover billing errors, save money and reallocate it to areas where it is truly needed. You can also outsource some of your work out instead of hiring an internal staff. For some load, such as accounting and bookkeeping, outsourcing them to secretarial and accounting firms like HeySara will be more affordable for SMEs than hiring an internal staff.
Maximize Employees Skills
Assess the current usage of your employee experience and skills and ensure their skills are being used to the maximum efficiency. Assign responsibilities appropriately to the most skilled and efficient employees in those areas.
Also, ensure that two people do not carry out tasks and projects that can be reasonable handled by one.
Barter with Other Businesses
Even though bartering might seem old-school, it is quite effective. If you need a good or service when cash supply gets low and have something of value to offer in return, then bartering is an alternative you should consider.
It can be a great way to help your business when the cash supply is low as well as build valuable relationships with other businesses. A win-win!
Embrace Virtual Technology
Harnessing virtual technology, wherever possible, can help reduce business costs. Not only does the use of virtual technology helps the company save money, but it also helps in increasing employee’s productivity.
Adopt the use of the virtual office- allow your employees to work from home. You will not only save money as you cut expenses on office lease, business taxes, utility (like electricity, water, internet, etc.) but also access new pools of talent with fewer geographical constraints and adopt innovative processes to increase productivity.
Ultimately, every business is different. Depending on your business, you may need to think outside the box to find the most effective cost-cutting measures for your company. Thinking outside the box will not only help lower cost but also help you compete in a crowded marketplace. Together with your team, you can also brainstorm creative ways to increase your business revenue and trim some financial fat.
Reducing expenses shouldn’t be an exercise carried out periodically. At least once every quarter, take time to evaluate your budget and look for ways to reduce your business expenditure for increased profitability. This will reduce the likelihood of having issues with cash flow in the long run. However, you should note that you should never sacrifice quality and value in a bid to reduce your expenses.