What is your company’s operating profit margin? Is it 11% or lower? The average operating expenditures for businesses on the S&P 500 is 11%.
If your business is performing worse or you don’t know what your operating profit margin is, then it is time to reduce your costs.
When it comes to business expenses, there are some ways you can cut costs and save money across the business.
Let’s figure out how to save your business money.
1. Lower Financial Expenditures
Take a look through your company’s expenditures and determine where you can save. Look at things like your electric bill, insurance, and unnecessary debt.
To save money on electricity, you could consider installing solar panels. The upfront solar panel cost far outweighs the long term savings you will experience.
Look into combining your insurance policies into one large umbrella policy. Insurance companies will offer discounts when you have multiple policies with them. This will also ensure that you do not have duplicate coverage.
2. Use Efficient Time Strategies
Look for ways that you can use time efficiently throughout the company. After all, wasted time means wasted dollars for your business.
Try to minimize potential distractions and time wasters for your employees. There is a variety of software that can track productivity, billable hours, and projects.
You can also look into software that will block certain websites like Facebook or other social media. This will prevent your employees from spending an hour on things that are not work-related.
Next, look for processes within your company that you can automate. If you package and ship products, there are ways of outsourcing or automating your inventory management.
Set up automatic ordering on supplies that you regularly use. This will eliminate the bulk of work you do managing orders every week.
3. Maximize Your Employees’ Skills
The standard way business owners save money is by cutting staffing. However, this only serves to put a more significant strain on the people that are left.
Instead, make an in-depth assessment of your employees’ skills. Then determine how you can utilize them in your business.
By having people use their top skills throughout your company, you can save money in lost productivity and errors.
4. Focus on Quality
This strategy doesn’t necessarily cut your business expenses, but it does improve your operating expenditure ratio. When you produce quality products, you can charge more. You will also have more repeat customers and therefore increased sales.
By having a higher revenue, your bottom line will also look healthier.
Lower Your Business Expenses
When it comes to lowering your business expenses, the most significant impact will be those items that affect your entire company. Things like your electric bill or insurance.
You should also look at ways to maximize your profits. This will increase the margin between your profit and expenses.
Be sure to check out our blog for more business tips and tricks for success.