There’s never been a more critical time to think about ways to cut costs at your business.
Coming out of COVID and straight into the catastrophe of the Ukrainian war means the “cost of living” crisis we knew was coming has been made even worse. However, there are some practical ways you minimise energy costs and overall production expenses.
Outsource Where You Can
You’ve almost certainly heard of outsourcing. Outsourcing is when you hire a third party to take care of specific tasks. Usually, it’s because you don’t have the skills, time or employees to do these tasks yourself. However, a significant advantage of outsourcing is that you can save a lot of money because you typically access services at a fraction of the cost. For example, an SMB usually doesn’t have the spare funds to hire a team of full-time computer engineers. However, you can outsource IT support for access to 24/7 support by skilled technical personnel.
Cut Costs at Your Business with Alternative Software
Software is a considerable expense for modern businesses anywhere in the world. In the United States alone, SMBs spend upwards of $10,000 per year on licensing. But you may be unaware that this doesn’t have to be the case. Using alternative programs, you can source business software for much cheaper or even free. For example, suppose you can no longer afford your Adobe Photoshop license for preparing your eCommerce product images. But the open-source alternative, GIMP, provides many of the same features and is free for commercial use.
Reduce Office Space with Remote Work
Like your personal life, commercial landlords are also putting their rent up. Because of this, you might find a rent increase squeezing your company for more money than you can afford to pay without going into the red. However, if your lease ends, it could be better to move to a smaller office. And you don’t need to worry about the space. Because rather than letting people go, it’s easier than ever to implement a remote work system. All you need is a good quality internet connection, laptops or PCs and specific collaboration apps such as DropBox.
Establish a New Energy Consumption Policy
Surging energy prices are among the significant contributors to the current cost of living and cost of doing business crisis. Therefore, a plan of action concerning substantial changes to how your company uses energy might be required. For example, enforcing device switch off with disciplinary action will reduce energy. But you could also switch lightbulbs to LEDs that use 90% less power. But it’s not all about electricity. For example, many modern offices save money on water by reusing grey water (non-biological) for activities such as cleaning company vehicles.
Invest in Money-Saving Tech
In business, you need to speculate to accumulate. Or put money in to reap the rewards. It might sound counterintuitive to spend money on new technologies while trying to save. But in business, it’s best to see long-term goals. So here are some investments that will save money:
- Wastewater recycling technologies for significantly reduced water bills.
- Switch to process automation where necessary.
- Install smart plugs that reduce phantom energy usage.
- Consider energy-producing technologies like solar panels and wind turbines.
- Switch from landlines to internet-based VoIP phone systems.
These are an investment, and some are pretty steep. However, making sweeping changes to critical infrastructure as part of a money-saving plan is a necessary expense. Implementing one or more of these will help reduce overall costs immediately and into the future.
Explore New Markets with White Labelling
Cutting costs might be necessary at the moment. But you can only go so far. One solution might be to increase income rather than reduce expenses. Consider white labelling before you think you don’t have the time or money for new product development. White labelling is when you repackage the services or products of someone else and sell them as your own. Common examples include cosmetics, phone accessories and even web hosting. The beauty of white labelling is that you can begin immediately, and almost all the work is already done aside from marketing.
Audit Your Company’s Resources
Some people are unreasonably afraid of an internal audit. And while an audit can set you back some initial money, it will help you save a lot by identifying where you can cut costs and improve services. When you have a clear picture of your company’s health, you know where everything stands from a financial perspective. Moving on, you can then prioritise where to allocate funds and where you can cut them. Additionally, an audit is also helpful for restructuring your business to better suit compliance and best practices, so minimising costly mistakes.
Retain Employees to Cut Costs at Your Business
You can save your business a vast amount of money by taking the time to employ skilled professionals and making every effort to keep them. On average, it costs at least one year’s salary of an individual to replace them throughout the recruiting phase. But you can minimise this cost by ensuring you hire the right person in the first place. So it’s vital you don’t rush recruitment. Further, ensure you meet the average pay for a skill, or an employee will leave. Finally, invest in skilled and unskilled employees alike with training and advancement.
Assess Services and Products
As a business, you offer either products, services or both. However, it’s probable that some of these don’t sell as well as others and could cost more to promote than you earn from them. Therefore, it’s helpful to analyse your products and identify the ones you can remove. Not all your products will work for you. And consumer habits change with trends. Data analysis will help you examine your business, so you can make actionable data-driven changes moving forward. Data doesn’t lie so long as you source, explore and use it properly.
Summary
Because of everything happening now, you might be looking for a way to cut costs at your business. Energy prices, supply chain issues and economic woes mean you could be facing tough times. Fortunately, you can implement some easy changes to reduce costs. These include outsourcing, assessing energy use, cutting services, and entering new markets.