10 Cost Cutting Ideas & Money Saving Tips For Your Business
There are two primary ways to make your business more profitable: earn more revenue or reduce costs..
For many startups and new businesses, earning more is the primary focus. However, once their growth starts to level out or the market slows, the focus shifts to cutting costs. When cutting costs, it's vital to ensure the changes you make don't negatively impact the quality of work you provide. Here are ten ideas for cutting costs and saving money in your business.
1. Create a Remote Work Environment
Remote work is the way the world is moving. Developments in technology were already pushing the world forward in this way; the global pandemic (COVID-19) accelerated that shift. Creating a remote work environment can help you save money and cut expenses in a variety of ways. The primary impact is on overhead costs associated with your day-to-day operations. Not having to pay for office space has a tremendous impact on a business's bottom line. Taking rent and utilities out of the equation will save your business thousands of dollars each year.
Another cost-saving consideration when going remote is the ability to cut back on office supply costs. Printer toner, paper, paperclips— all of those things add up.
Create a remote work environment by allowing your employees to work from home. Implement a cloud storage system, such as Dropbox, for secure file sharing that replaces the need for printing, faxing, and filing. If you need a larger meeting space, renting a co-working space will be significantly more affordable than sustaining a traditional office environment year-round.
2. Streamline Invoicing and Accounting
Streamlining your accounting and invoicing will have a multifaceted impact on your costs and cash flow. Using one, centralized system for your accounting needs will help you cut back on the need to hire a bookkeeper as well as requiring fewer resources for processing.
Streamlining invoicing reduces the time frame to getting paid. As a result, bills are paid on time, and your business incurs less interest from debt. Creating processes within your administrative tasks also helps your business during tax season, by helping audit-proof your accounting and maximizing your return
Fortunately, streamlined accounting software doesn't have to break the bank. FreshBooks is favored by small businesses, as it not only offers centralized accounting and invoicing but also processes credit cards.
3. Use a Call Center
Call centers are often overlooked as a powerful tool for scaling your business and increasing revenue. Think about it this way: what happens when a customer calls with a question about a potential sale and gets directed to voicemail? Chances are, they'll either hang up or leave a message, then call the competition.
Using a call center can ensure there's always someone around to answer questions or customer support calls without long periods on hold. Using a call center is also far more affordable than hiring an in-house employee dedicated to screening and directing calls.
Many call center providers can also handle other business tasks, like accounts receivable or collections, and outbound contact— one of the great examples is NICE inContact. Using these services will cut back on the costs associated with hiring, training, and retaining full-time employees.
4. Automate Your Social Media
Social media is viewed as a necessary evil by many companies. Even with marketing professionals assigned to managing social media curating and scheduling, it's a big job.
Automating your social media can reduce the manpower needed to post content across various platforms. Apps like Hootsuite create a centralized dashboard for your social media planning and campaign analytics. Rather than having to log into separate accounts to respond to customers and post updates, Hootsuite lets you do it all from one screen.
Using a scheduling app also takes the guesswork out of timing and works with the various social media algorithms. These tools help you save hours of labor while engaging in a necessary modern business activity.
5. Audit Your Expenses
In life, you don't know what you don't know. The same theory applies to business. Many business owners can't keep their expenses under control because they don't know what they are. They see a lump sum at the end of a reporting period without knowing the driving factors behind it.
Take time to audit your expenses and see where your business is hemorrhaging money. Mint is a fantastic app for this purpose. Mint will sync with your various bank accounts and automatically categorize your expenses so that you can drill down into where your money is going. It will also send you notifications when you're reaching the limits of your weekly or monthly budget.
Auditing your expenses is the best way to drive strategic changes to your spending and help your business save thousands of dollars per year.
6. Reduce Travel with Video Conferencing
Video conferencing technology is readily available and accessible on a global scale. It's no longer necessary to travel to get face-to-face with a potential client or employee. Instead, hosting conferences and meetings online can dramatically cut travel expenses.
While some situations necessitate an in-person visit, using a program like Zoom to connect will mitigate those costs over time.
7. Track and Reward Productivity
Sometimes business costs and expenses aren't obvious or tangible. A loss in productivity creates an indirect financial loss as well. If your business follows a traditional 9-5 model, there's a good chance you're paying your employees for scrolling the web or socializing throughout the day.
Implement protocols and technology that helps you track and reward productivity. A great example of this software is Time Doctor, a program that runs in the background and analyzes what applications are being used and how much downtime accumulates throughout the day.
Reward your employees for hitting milestones and goals, but be realistic— everyone needs a break to stay happy and productive.
8. Barter and Trade for Supplies and Services
Another way to cut costs in your business is to negotiate trades and barters in exchange for things you need. For example, if you own a seafood distributor, you might offer a free shipment of lobster in exchange for air conditioner maintenance. While there are still costs associated with doing business this way, it takes margins and cash flow out of the equation!
9. Use Affiliate Marketing Over Paid Advertising
As of January 2020, Tesla is a $100 billion company. Guess what percentage of their income is allocated toward paid advertising?
Tesla has seemingly achieved the impossible by creating a robust referral program that rewards current customers for bringing new customers into the fold. This is in alignment with many trends seen on social media over the past few years. More businesses are using affiliate marketing to offer a commission to customers who do their part to boost the company's earnings. This strategy also results in user-generated content, which saves costs further by providing free social media content for the business.
Explore how you can reallocate funds to put an affiliate program in place and leave paid advertising where it belongs: in the past.
10. Outsource to Contractors
Finally, you can save money by outsourcing to contractors rather than hiring employees for basically every business task you can dream up. Outsource to a virtual assistant to help with your email management and travel scheduling, rather than paying a full-time employee. Work with a marketing contractor rather than bringing a team in-house.
Like outsourcing a call center, outsourcing the departments of your business rather than building an employee base saves on hiring, training, and retention. You won't require an office space or supplies, you'll only pay for completed work, and you'll free up valuable time on things you might otherwise choose to handle yourself.
Incorporating these cost-cutting ideas and apps into your business can drastically reduce expenses and improve profits. Make strategic changes, analyze their effectiveness, and adapt your processes to create a sustainable, profitable business.
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