A Gartner survey reveals growth tops the list of priorities for most businesses in 2019.
If this is your #1 priority as well, you’re probably thinking of pumping a significant amount of money into scaling your operations. Maybe open a couple of branches in new locations, bring in more staff or expand your product line.
These are all awesome growth plans, but are you thinking about cutting costs?
Your growth efforts will likely amount to little if all the organization does is spend money. Real growth comes by way of saving money.
In this article, we are sharing creative methods on how to cut expenses.
Let’s get going!
1. Identify Your Current Expenses
Business finance works pretty much like personal finance. When trying to put a lid on your household budget, for instance, you first begin by identifying where the money is going, right?
In the same way, the first step to lowering business expenses is to make a list of your current expenditure. On which items is the organization paying the big bucks? Are there items being overbought? Are there expenses that are no longer necessary?
After the review, you’ll have a thorough grasp of your expenses and be in a better position to make effective changes.
2. Leverage the Power of Office Technology/Productivity Tools
How technologically-forward is your small business?
It’s surprising how many businesses think they are operating at the forefront of the new age when all they possess is a couple of computers and an internet connection. This is probably the reason more than 30 percent of all small businesses still don’t have a business website – in 2018!
Technology is a big cost saver. But only when you use the right tech solutions.
It can be tempting to purchase customized, high-end solutions for your business. After all, they promise the best performance. But why spend top dollar on such tools when there is free, open-source software that can deliver more or less the same performance?
Audit your current processes and find a low-cost tech solution for each one. From invoicing to payroll, time tracking, teleconferencing, payment processing, and appointment scheduling, you’re bound to find a free or cheap tech solution.
3. Save on Energy
You don’t have to believe in climate change to green your business. If not for the environment, do it for your business’ financial wellbeing.
How much are you spending on power bills? If you’re like most businesses, you’re spending north of $600 every month. Give that a year and you’re staring at a $7200 bill – at least.
The first change is to install a programmable thermostat, because heating and cooling use the most power – unless your business is a manufacturing plant. Smart thermostats automatically adjust the temperatures across your office, ensuring heating or cooling goes only where it’s indeed. According to professional estimates, installing this device can shave off over $100 from your annual power bill.
It looks a tiny amount compared to a $7K bill, but it’s the small savings here and there that add up.
Another option is to install solar panels, but this is only practical if your own the property housing your business. If you’re leasing or renting, that’s the landlord’s decision, so it’s out of your hands.
If you can, also install energy-saving windows and doors.
4. Go Paperless
Did you know the average worker uses 10,000 sheets of paper every year?
If you have an office of 10 people, that’s 100,000 sheets. A standard quality ream of 500 sheets (size A4) costs 10 bucks. The best quality stretch to $50 or more.
100,000 sheets a year works out to 200 reams, costing $2,000. If you’re using the best quality papers, you’re spending at least $10,000!
How does the prospect of wiping off at least $2,000 from your office stationery budget sound? Awesome, yeah? That’s what will happen when your office goes paperless.
Obviously, adopting a paperless environment is not without its drawbacks. Paper still remains a superior productivity tool. There is nothing as practical and intentional as writing a to-do list on a clean sheet of paper.
But you don’t have to phase out paper in one go. Begin by setting a goal – say, every employee reduces their paper consumption by 25 percent every quarter. And encourage the use of digital alternatives, such as sticky note and to-do list apps.
Gradually, your office will need less and less paper, and you’ll cut a fistful of money from your expenses.
5. How About a Shipping Container Office?
Admit it. The thought that first strikes your mind when you hear the words “shipping container” is of an ocean liner cutting through the water with blue and red shipping containers atop each other.
Nobody can blame you. However, these containers are today used for far more than shipping stuff. And so when you’re looking to cut business expenses, a shipping container office is an attractive prospect.
They are way cheaper than traditional brick and mortar or glass offices. This is not even the best part. Shipping containers offices can be mobile, allowing you to easily relocate when needed.
It’s normal to be skeptical about a shipping container office, especially since your office building can affect employee productivity. But as long as the interior is ergonomically worked out and the container itself installed in an ideal location, there is nothing to worry about. Interested? Explore shipping containers for sale in your location and have your pick.
6. Let Employees Work from Home/Remotely
Working from work has its benefits. As an employer, you’re able to effectively track workers’ performance. Nobody can tell you they’re winding up on a report when they’re actually adding shows to their Netflix watchlist.
Such benefits, though, don’t outweigh the benefits of allowing employees to work remotely. There’s a reason no less than 43 percent of employed Americans are working remotely at least part of the time.
Telecommuting not only improves employee satisfaction, productivity, and loyalty, but also reduces your overhead.
When some employees don’t work from the office, there are fewer workstations that need to be powered up. Energy consumption goes down. If your business provides snacks and drinks, you’ll save on that too.
In terms of absolute figures, an Ohio University study established that letting one employee work from home full-time saves a business $10,000 every year.
7. Make Use of Shopping Deals
Black Friday and Cyber Monday deals are a good time for most people to make personal purchases and enjoy good discounts.
Do you use such shopping holidays to make purchases for your business? If not, you’re probably missing out on a chance to buy items your business needs and save decent cash while at it.
If the office coffee maker has seen better days, for instance, don’t make the rash decision of paying big bucks for a spanking new replacement from an appliance store. It pays to wait for shopping holidays and pounce when you see a good deal. The same goes for other items such as office furniture, printers, and computers.
Deals don’t stop at physical items either. Chances are you’re paying subscription fees for various online solutions. Watch out for discounts and purchase when you spot a good deal.
8. Run a Cost-Cutting Awareness Program
A major mistake most small business owners commit is making cost-cutting a management-level endeavor.
Sure, at the end of the day it’s the management’s responsibility to run a tight ship. However, you stand a strong chance of successfully lowering your overhead when everyone in the organization is on board.
This is where cost-cutting awareness programs come in handy.
All you have to do is arrange training sessions where you equip workers with cost-cutting skills. It’s also an ideal time to let them in on the financial objectives of their firm.
To make the awareness program even more impactful, promise a reward. For example, if the firm successfully reduces expenses by 30 percent by the end of the 2019 financial year, every employee gets a week off at a time of their choosing!
Learn How to Cut Expenses and Grow Your Business
The cost of doing business keeps going up, and the economy isn’t getting any learner.
As a savvy business owner, you have to learn how to cut expenses, or your overhead will spiral out of control. And when that happens, you’ll either live with reduced profit margins, or close shop.
It doesn’t have to get there, though. We have given you some of the most creative tips you can use to slash your expenses and keep your business thriving.
As you put them to use, be sure to keep tabs on our blog for more business advice.