In these uncertain times, it’s more important than ever before for businesses to explore a wide variety of cost-cutting ideas. Because nobody has any idea what tomorrow will bring for the public and private sectors, companies – large and small – must consider all avenues regarding how to sustain business operations. It would be great if firms maintained the status quo, but this would be foolish considering what’s occurring out there.
The recession is already forcing thousands of entrepreneurs to shutter their doors. Unlike other economic downturns, organisations need to think about more than just spending less. Unfortunately, in this chaotic economic landscape, firms must look at how to adapt to the so-called ‘new normal’, whether it’s adjusting the business model or bringing the business to the online world. Entrepreneurs will see their companies fail.
Here are 17 smart ways on how to cut business costs.
1. Use internet marketing
Is it a surprise that digital marketing traditionally has a better ROI than print advertising? One of the reasons is that internet marketing (search engine optimisation, social media, email and PPC) is a lot cheaper than a newspaper ad or billboard. Ultimately, online marketing helps you spend less while getting more.
As you take a different approach to generating brand awareness, you might think about ditching the local magazine and begin to mull over SEO.
2. Outsource when necessary
Are you or your team procrastinating on a task? Does everyone dread beginning this chore each time it’s delegated? Do you find a lot of mistakes when the task is completed by your staff? If you answered ‘yes’ to any of these questions, it’s time to start outsourcing.
So, what should you outsource? Here are a few recommendations:
- Answering your phone (a virtual receptionist)
- Conducting research to complete your database
- Graphic design for presentations in front of clients
- Lead generation
3. Promote remote work
Many companies have embraced work-from-home policies in today’s environment. For businesses that have refrained from going all in on telecommuting, you might find it’s worthwhile to at least experiment on remote work for the sake of your finances.
By promoting remote strategies, even if it’s just one or two days a week, you’ll find tremendous cost-savings. Plus, employees who work from home tend to be more productive and clock in more hours.
4. Hire freelancers
Hiring a freelancer is one of the best investment decisions you will make because you don’t need to deal with the various tax implications and labour regulations of taking on a full- or part-time employee.
But when is the time to hire a freelancer? There are three situations when it’s time to initiate the search for a freelancer: an unsteady workload (work is too much or too low), a project that requires a one-time rare skillset, and irregular tasks.
5. Add free digital tools to workplace
Back in the day, when offices were starting to embrace desktop computers, many businesses invested in hundreds or thousands of dollars in computer software. Today, that is no longer necessary.
The world wide web has fostered an environment where you can access thousands of productivity-related digital tools for free, saving your workplace a lot of money that can be better used for other elements.
Unsure what free tools to use? Here are several that can facilitate better productivity:
- Cloud storage (Dropbox)
- Project management (Slack or Trello)
- Accounting (Wave)
- Document scanning and signing (Scannable or DocuSign)
- Customer relationship management (Apptivo)
- Open source software (WordPress)
6. Automate repetitive and time-consuming tasks
Let’s be honest: there are tasks at your company that people detest. And, of course, there are tasks that are prone to human error. One of the simplest solutions is to automate the repetitive, the mundane and the time-consuming tasks that your personnel loathes. Here are some tasks that can be automated:
- Paying your monthly or quarterly bills
- Organising meetings and sending reminders
- Replenishing inventories, from office supplies to printer cartridges
- Email responses to customers
- Filtering job applicants
7. Monitor your tax write-offs
You may be missing out on great savings if you’re not paying attention to your outlays that can be used as write-offs come Tax Day. This is beneficial for both you and your employees, even if they’re working from the comfort of their living rooms.
It can be difficult to keep track of your write-offs throughout the year, but a simple trick is to have an envelope at your desk, add all your receipts and then key them in a spreadsheet.
So, what can you write off, anyway? Here are only a few things you can consider to drastically decrease your tax bill:
- Home office expenses (telecommunications, utilities, mortgage interest, etc)
- Vehicle expenses (fuel, insurance, parking fees, toll charges, etc)
- Accounting and legal fees
- Office rent
- Insurance (general business liability, business interruption and property, etc)
- Capital assets that depreciate over time (furniture, computers, automobiles and the property)
- Meals and entertainment, although this can depend on your jurisdiction
8. Review your corporate spending regularly
Unless you have a magic money tree in your breakroom, you need to balance your dollars. It’s imperative that you either keep track of your pennies or tighten your belt. This is only achieved by reviewing your corporate spending regularly to find any waste, redundancy or outlays that may no longer be necessary. By balancing your budget and employing the necessary cost-cutting ideas, you can better improve your bottom line.
9. Cut down on utilities
Spending money on energy is the cost of doing business. Perhaps rising hydro and water costs are enough to push your office to adopt telecommuting. That said, if this is an impossible transition, you need to employ several measures to slash your monthly utility bill.
There are simple things you can do that will unlikely hamper business operations, resulting in more savings to reinvest in the firm. Here are a few ideas:
- Turn off the lights when the office is closed
- Establish an automatic thermostat
- Unplug your devices when not in use
- Install energy-efficient appliances
10. Buy used computer equipment
Technology is now a critical component of your organisation. From computers to printers to mobile devices, your investment in equipment can be quite hefty. A solution might be to purchase gently used computers. With enough due diligence and research about the used computers you’re thinking of buying, such as the supplier and the store, you can see savings as much as 40%.
Of course, if a three-terabyte Apple computer is selling for a couple of hundred dollars, walk away!
11. Maintain sufficient inventory levels
It might be counterintuitive but having more inventory will not benefit your firm. Reducing your stock will save you money, primarily because when your inventory is oversaturated, it becomes outdated eventually. Or if consumer demand falls short of forecasts, the unsold supply creates more expenses.
By limiting your inventory, you cut down on material maintenance and you minimise waste. Indeed, thanks to technological innovations and global supply chains, it’s unnecessary to order more inventory than what is necessary.
12. Go paperless
It’s estimated that the average officer worker consumes approximately 10,000 pieces of paper per year. Moreover, offices spend $20 per paper to file it, $120 to search for lost documents and $220 to recreate these documents. Then you need to factor in the storage space that can lead to higher costs. When you crunch the numbers, the cost of paper adds up over time.
If your business can handle it, you should consider shifting to a paperless office. But how can you initiate the transition? Here are a few tips:
- Use cloud storage services and pay the premium if necessary (it’s worth it!)
- Invest in cybersecurity programs for mobile devices
- Apply paper-saving techniques throughout the office, such as having hours that workers can use the printer or copier and hosting digital presentations
13. Audit your email lists
Small businesses invest a lot finite money in their email marketing endeavours by acquiring leads and coming up with the best copy. So, if you’re discovering that fewer people are receiving your emails, it would be a prudent idea to audit your email lists. You should conduct a semi-annual review every year to ensure that your leads are still around. Why waste money by adding more leads or relying on leads that no longer exist?
14. Bundle your telecommunication services
As a regular consumer, you’re always searching for ways to save money for your household. A common tactic is to bundle your telecommunication services by putting together your cable, internet and phone under the same umbrella. This saves you money each month, even if it’s only $10. Why not do the same for your business? Instead of paying multiple companies for each service, you can transfer everything to under one roof and receive instant savings.
15. Save on packaging and shipping
Can anyone solve the problem on packaging and shipping? Probably not. But there are methods to mitigate rising shipping and packaging costs. This could consist of reusing packaging supplies, shopping around for the best rates and, if applicable, impose a buying minimum amount on your website for free shipping.
16. Pay invoices early
Everybody wants to get paid as early as possible. Some entities are so desperate for their clients to pay their invoices early that they will offer a discount. Do you smell the opportunity for some quick savings?
Let’s say that your supplier slaps on a 1% to 2% discount for paying your invoice in about a week. If not, the full amount is due in 30 days. A 2% return over three weeks turns out to be a spicy meatball, returning about 35% at an annualised pace.
17. Never pay interest
If you’re paying interest, you’re throwing money out the window.
Why do we pay interest, anyway? Typically, it’s because we may have paid a bill a few days late or we missed paying a bill for an entire month. It could be because we submitted our income tax return too late, forcing a substantial interest amount.
Whatever the case, it’s imperative to never pay interest, and this could be done by automating your bill payments (see Tip 8!) or cutting back on your expenses.
While many of the experts have an idea as to when an economic downturn is on the horizon, nobody could have envisioned 2020. With so much uncertainty in the world, business owners are forced to conjure up practical solutions to surviving the financial slump that has engulfed the planet. From drastically cutting your business costs to overhauling your staff to raising prices, tough decisions need to be made.
What strategies have you employed in your company to reduce costs? Let us know in the comments section below!