Looking for cost-cutting strategies to save your business some extra money? Make sure your business is running as lean as possible with these 9 tactics.
If you have been feeling the crunch these last couple of months as a small business owner, you are not alone. According to StatsCan, Canadian businesses reported that revenues for the first quarter of 2020 went down by 20% compared to the previous period. Small businesses were also most likely to request credit to cover their operating costs due to revenue shortfall.
Looking for ways to cut costs and save money can be a lot easier and quicker than trying to boost your sales. Keep in mind, however, that cutting costs does not mean sacrificing quality or value! Here are some ideas for cutting costs to increase your bottom line.
If your business still uses a lot of paper, going paperless or reducing paper usage can help you save money. Consider that an average employee uses 10,000 sheets of paper in a year. If you add in the cost of printers, copiers, toner, fax machines, file cabinets, not to mention the number of people in your organization, that all adds up in costs. Industry research firm Gartner, Inc., estimates that as much as 3% of a company’s revenue is spent on paper, printing, filing, storing, and maintaining files of information. On the other hand, digital tools like Office 365 will let you create, store, and share digital documents easily at a much lower cost.
Consider Remote Work
How necessary is office space for your business? If you find that your employees can get their work done remotely and stay connected using tools like Office 365 and Microsoft Teams, consider eliminating your office space to cut costs. If you don’t have to pay to rent an office, you will save on costs for office space, business taxes, insurance, and utilities. Plus, studies have shown that employees who work from home are often more productive and happier. If you find that some tasks are better suited to the office, you could still downsize your office and rent a smaller space and offer a flexible work schedule, where employees work from home certain days of the week.
Review Your Business Processes
If you get more done in less time, you are saving your business money. If you are a small business, are you and your employees spending a lot of time doing manual tasks? Are you heavily reliant on spreadsheets, paper-based invoices, or sales orders? Do you have automation set up for repetitive tasks? Audit your business processes to identify areas where you can easily increase your efficiency and eliminate redundancies.
Track Your Inventory
If you are running an inventory-based business, efficient inventory management will help you cut costs. One way to save is by reducing any current obsolete stock or excess inventory by discounting pricing or product bundling. You should also try to place smaller orders and order only as needed – this will help buffer your costs and avoid potential risks or issues. If you manage inventory manually, consider adopting software that can help you manage inventory and optimize your supply chain like Dynamics 365 Business Central.
Review Your Monthly and Annual Payments
Many businesses end up paying for monthly or annual subscriptions and programs that are unnecessary or that they don’t even use. Small cuts in expenses like these can add up to large savings in the long run. Review everything that your business uses that isn’t necessary and you may find some services you can cut back on or eliminate without hurting your business.
Modernize Your Marketing Tactics
Small businesses should focus on marketing tactics that bring them the highest ROI. If you have been primarily relying on traditional forms of marketing, such as print ads, radio, or outdoor banners, consider trying digital marketing which can be a lot cheaper. For instance, sending email newsletters and promos can be done at a very low cost, thanks to the plethora of inexpensive marketing tools out there. You should also try to generate word-of-mouth marketing by asking customers to review your business on sites like Yelp and Google Reviews. Finally, focus on optimizing your website so you can easily be found on Google organically when people search for terms related to your business offering.
Negotiate with Vendors
Have you tried negotiating with your vendors? Often in a tough economy, many vendors are willing to negotiate to keep you as a customer. It may or may not work but there’s no harm in trying. On the plus side, if it does work, you might just save yourself a couple of hundred dollars off your monthly operating costs.
By going green you’re not only helping the environment, but also your business. Going green is a smart financial move as well. By doing simple things such as powering all equipment off when not in use or replacing your incandescent bulbs with LEDs can help your business save. Since the objective is to reduce energy usage, you will be reducing your costs. Plus, if you embrace going green in your business, you can also look at tax credits available for going green.
Move to the Cloud
Often many mid-sized businesses have legacy software systems in place, such as an on-premises ERP system. In such a case, you’re probably spending a lot of money every year on hardware, maintenance, and IT costs to keep the legacy system going. Switching to a cloud-based system could save you over $20,000 per year since you don’t need to pay for upgrades, maintenance, or other hidden costs. You can also just pay what you need it, allowing you to scale your operations up and down easily. Download this infosheet to learn how migrating to the cloud can lower your total cost of ownership.
Increase Your Business Efficiency with Kwixand Solutions
Book a free consultation with the Kwixand team to learn how your organization can improve and optimize your business processes. Our experts can help you identify opportunities to increase efficiency and productivity, and ultimately, your bottom line.