Business owners are in the habit of making money. True or false? True, of course! But, here’s the catch, far too many business owners are wasting money unnecessarily. In fact, 82% of all businesses fail because of cash flow problems, reports Business Insider.
The easiest way to reduce business costs is to recognize the necessary from the unnecessary. If you pay a lot to a social media expert but have the highest, most positive social media presence then that’s a market differentiator. If you’re paying a lot to an automated service line then that’s a clear starting point of cutting costs.
Reducing costs and creating healthy processes that will only cost you less money over time doesn’t have to be time-consuming or take too much thought. It’s just about making smart choices when reducing business costs.
We highlight 14 simple ways to reduce business costs.
1. Use The Right Technology
Using technology whenever possible can help you save money and take your business forward. Hold meetings virtually so you can save on petrol/gas money. Use online payment services, like PayPal or Venmo. Google Docs, Basecamp, or Trello are free tools that can help organize and centralize your company documents and offer collaboration tools so you don’t need a million paper documents and countless physical meetings.
Technology also helps your employees to focus on the most important things. Eliminate all the logistic work and make sure that 80% of the time, your employees are doing what they need to and aren’t just focused on the logistics.
There are many app solutions available to enhance employee management, Connecteam is a leading all-in-one employee management app that offers robust features to streamline daily operations.
- Better employee engagement: issue surveys, send newsletters to keep your team updated, share photos, videos, or GIFs, use the suggestion box, and create an open-door policy to increase employee engagement.
- Stronger internal communication: keep everyone up to date and engaged by implementing real-time push notifications and updates, chat groups, and an employee directory.
- Efficient training & onboarding: provide the best employee experience through direct access to training resources, including employee handbook, vacation policy, schedules, benefits, dress code, etc.
- GPS powered time tracking: right from their mobile phone, employees can clock in and out where a real-time timestamp and GPS location is tagged.
- Send and receive reports in real-time: streamline reporting while on the go with real-time reports that can be submitted from anywhere, like an expense reimbursement, COVID-19 daily health declaration report, etc.
- Efficient job scheduling: build a schedule that is based on different requirements, provide all necessary information such as time, address, and special instructions, allow your team to accept and reject shifts, and more.
- Ensure compliance: keep your team compliant with digital ‘read-and-sign’ forms such as employee handbook, sexual harassment policy, etc.
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2. Rely On Modern Marketing Methods
Eliminating paid advertising isn’t advised all-together but there are some cheaper alternatives that you should explore:
- Network! Customers are more likely to work with you because they recognize you so take on all the networking opportunities.
- Do more of your marketing work in-house instead of paying someone else. Sure, there are plenty of experts out there but you can do some research online to find tips and guides that work for you.
- Boost your social media presence but choose the right platform for you such as Facebook, Snapchat, LinkedIn, Instagram, Twitter, Pinterest, etc. Be sure to set a goal and create a strategy, as posting randomly will get you nowhere. Just ensure that you’re being genuine and really connect with your audience.
- Offer a referral program while building your customer email list. Recommendations from current customers can lead to sales more quickly.
- Ask current customers to write reviews, whether, on your website or social media channel, glowing customer reviews are golden! Or ask for recommendations on Reddit or Quora. Remember that people trust online reviews almost as much as if they were to receive a recommendation from a friend or family member.
These modern methods really do work, however, to ensure you’re cutting business costs then you just need to try as many as possible to see what works and doesn’t work for you.
3. Go Paperless
Sure, the price of paper, ink, mailing supplies, and postage is minimal but it can add up to extraordinary amounts if you’re not careful. By going paperless (unless printing is absolutely necessary), you can reduce these recurring business costs. Switch to a digital invoice and bill payment system and you can file all paperwork on your computer because once you print everything, you have to deal with piles of paperwork that will only clutter up the office space! And that’s not eco friendly nor is it good for business costs.
The Connecteam checklist app makes it easy to switch all checklists, forms, and reports to digital. In just a tap, you and your employees have access to all the paper forms needed so you don’t waste time printing thousands of documents and no one has to lug around heavy binders. Onboarding forms, expense reimbursement forms, vacation requests, sick leave forms, safety reports, invoices, equipment checkout and so much more can be filled from anywhere and will automatically land at your desk. Everything you and your employees need is available at your fingertips.
4. Landlines Are Overrated
The time of the landline is over. Long over. If you’re still using one, you’re bleeding money as it is an unnecessary business cost. Instead, you should use your cell phone, VoIP, or even virtual phone lines to save money.
In fact, AT&T has said that by 2020, they will remove landline coverage, “We’re investing in a technology that consumers have said they don’t want anymore and wasting precious hundreds of millions of dollars that could be going to the new technologies that would do a better job of serving customers.”
5. Create A Budget To Succeed
Budgeting is kind of a no-brainer when it comes to reducing business costs. You just can’t make smart financial decisions if you don’t actually have a clear idea of how much money is coming in and out each month. A budget allows you to have a daily view of how you can reduce business expenses right then and there.
Budgeting and financial management must be a focus so that you can avoid common mistakes. The best option is to create a “working budget”.
The term “working budget” means that it is a work in progress. The owner looks at it every day, consults it, follows it, and makes adjustments. It’s the game plan for the business.
A working budget allows you to make adjustments as you go along so that way you can cut business costs in real-time and not after the fact.
6. Lower Your Financial Expenditures
Take a close look at your insurance policies and financial accounts to reduce business expenses:
- Compare insurance providers to save money on insurance and then ask your current provider to match that rate.
- If possible, consolidate insurance policies or bank accounts.
- Evaluate insurance policies to check if you are being over-insured or have duplicating coverage.
- Avoid unnecessary debt. Conduct a thorough cost-benefit analysis and future forecasting looking into business expansion.
Consider opportunity costs and the effects that occur with debt payments on cash flow. Excess debt can strongly affect the company rating, interest rates, and borrowing in the future.
In addition, if you’re a small business owner, then chances are that your business credit card is in your own name. And if that’s the case, you need to pay off the card, in full, every month. However, interest charges can add up quickly so get into the habit of paying them off each month instead of adding up the amount and paying it off at the end of the year. Most credit card interest rates are 15.96% so that means you could save thousands every year by not having a balance on your credit card.
7. Time Management Cannot Be Overlooked
Time is money – isn’t that how the saying goes? So be sure to work productively without wasting time otherwise you’re just wasting money.
- Minimize distractions. Apps like Focus Booster, Todoist, or Rescue Time can help you to focus and to stay on point so important tasks get done first.
- Connecteam and Toggl are apps that can track employee working hours, the time spent on work activities/projects, and shows billable hours.
- Set expectations for how long an activity or task should take and offer an incentive if the expectation is met or takes even less time.
- Meetings should run on a predetermined block of time so everyone has to show up on time, should stick to the agenda, and needs to wrap up at the appointed time.
- Avoid unnecessary meetings by having everyone send a meeting agenda so they can highlight what needs to be discussed. If you can answer most of their points in an email, then there is no need for a meeting. Plus, this allows you to show to the meeting with answers to what was raised instead of having to schedule a follow-up meeting.
8. It’s All About Location
If you don’t require a physical location for your business then don’t buy or rent one. Look into working from home, shared workplaces, or each week or month, you can switch out which home you and your employees work out of.
However, if a physical location is what you require then make the most of it. Analyze how much physical space you have because chances are you don’t need that much storage space. Consolidate different functions of your business, like having a space that is good for dual purposes. A meeting room could be a break room, for example.
9. Buy Refurbished Equipment
Brand new, retail-price equipment can be a huge business cost and it’s one that can be easily avoided. Buy refurbished furniture and equipment because it’s just as good as the brand new equipment. You don’t need a brand new desk or chair, something from a Goodwill store or garage sale can do the trick just as well.
Remember that refurbishing doesn’t mean just one thing, it can involve reupholstering, adding a new finish or a different seat, and even painting some old furniture. Think about all those Pinterest before and after projects you see, it takes a simple touch and lots of patience to transform used equipment into a modern masterpiece.
10. Cut Down On Production Costs
There are ways to cut on business costs like material costs and to optimize your resources. Try this:
- Sell leftover cardboard, paper, and metal instead of recycling. Look into ways you can use your waste to create another product.
- Get the most out of your real estate. Centralize or consolidate any space possible and look into leasing unused space.
- Adjust and optimize resources by tracking and measuring the company’s operational efficiency. Set performance parameters that reflect your goals and offer incentives when goals are met.
11. Hire A Freelancer When Possible
Really consider if you need a full-time web developer, graphic designer, content writer, etc. Maybe you just need a few jobs a month? Offer part-time positions and be sure to outsource work for specialized tasks. However, choosing the cheapest freelancer isn’t always the smartest option as you might not get quality work in return. A good freelancer may have a high up-front cost but it’s better to pay someone one time for high-quality work than to pay someone over and over to fix it. Fiverr and Upwork are top sites where you can find good quality and priced freelancers to get the job done.
12. Travel Less
We hinted at this earlier, but taking unnecessary trips will only eat up your time and will cause travel expenses to add up. Avoid this by using online applications that offer quality video service, like Skype or Zoom. You can video conference, hold webinars, screen-share, and more.
Now, we know that due to COVID-19, traveling less is much easier than it was before and there are many businesses that are shifting to remote work when possible. So if you’re going to be working from home, ensure that you’re working productively by reading our guide.
13. Save On Electricity
Be strict on office policies because the electricity bill can be a ridiculously high business cost. Unplug unused electronics, turn off lights when not in use, use sunlit rooms, and more, to save on money.
In addition, it can help to call your local electric company to have them run an electricity audit so you can better understand how electricity is being used at the office or even your home.
A few other tips include: change the lightbulbs as there are many energy-saving options available, check for air leaks, replace the air filter, set the thermostat so you don’t change it often, if there is a refrigerator then set it to 35–38 degrees, and more.
14. Buy From The Little Guy
Shopping locally offers you more flexibility, because unlike big service providers, a small, local business can optimize their service to fit your needs like a glove. Write a list of all the major companies you work with and look into local listings to see if there is another company that costs less.
There are also more benefits to the whole community when you buy local. For example, more jobs created, money is kept in the community, locally owned businesses will contribute much more to local charities, the community stays unique and offers one-of-a-kind services, offers more consumer choices, reduces environmental impacts, and much more.
Save On Business Costs In 2021
No matter what level your business is currently on – from the startup phase to well established – cutting business costs is always in the back of a business owner’s mind. Through the tips we outlined above, you have a ton of ideas up your sleeve for when you need to save on business costs, and the last thing you want to do is cut staff. Cutting staff should be the last step. Try a combination, or even all, of the tips above at any point that’s needed.
Reduce Business Costs with Connecteam
Connecteam’s employee app helps businesses cut business expenses by allowing managers to communicate better, reduce employee turnover, increase engagement and helps streamline daily operations, building professional skills, and so much more.