Starting and running a business is no easy feat. You are responsible for the whole operations, including financing and making it efficient and profitable. Each year multiple businesses fail due to the lack of management in finances, or worse, failing to control costs. Managing business expenses is an art and not anyone can be a cost-cutting artist.
But fortunately, this can still be learned. It is a tough process and requires patience, time and sacrifices. It will not alter your business plan and will only provide your newly launched business opportunities that might not be there for other business owners.
This article is all about cutting business expenses and the strategies you can apply to trim the brimming cost and have a sustainable profit.
1. Managing Non-Essential Appliances and Lights
A blunt way to reduce expenses is to reduce the utility bills, which often skyrocket due to less care and attention towards our surroundings, especially when you have employees who are not footing the bill. There will be multiple lights, appliances, and machinery that will be idle, but turned on. To cut your expenses you must pay attention to these details and turn off any unwanted or unnecessary lights and appliances.
Unnecessary lights and appliances may include personal computer workstations, desk lights, or coffee makers. Ask your cleaning crew to keep an eye on these appliances and shut them off when they see no one using them.
Reducing running costs is one thing, taking down the initial also has its impact. Preloved or gently used are not always an embarrassment for offices. New companies can always benefit from used appliances for their initial years to cut expenses. Depending on your demand, choose preloved appliances for your office.
Gently used machinery will include anything from refurbished laptops to smartphones or tablets. It can also include cars, vans, and glassware, and even furniture. All of this eliminates the need to purchase something expensive and out of your budget.
2. Planning Cost according to Usage
Align your expense with your usage, this will not only help you in locating the most cost-efficient strategies but will also highlight things that are having a big chunk of your money without you realizing it.
For each service available for your office, like telecommunication or legal support, review your yearly report on these services to know exactly what you are getting. You can then go for cheaper options and choose economic plans for your company that will cost you less, such as virtual receptionist services and non-critical business function outsourcing.
3. Going for Smart Spacing
Smart Spacing is a key element to saving cost, and you might be aware of the stress the business owners feel to expand their office space. But as we are all experiencing the post-COVID crunch, you might consider leasing a smaller space or a more flexible coworking space for your office. It will cut the cost of large office space that you are not even utilizing.
At the same time, set aside your ego. Do you really want that big personal office just because you are the CEO? How about a small cozy cabin instead? Yes, you can always put up walls to make it a bit more private, but having enough space for your desk and chair, along with a seating for a couple of people will be more than enough in the start. This also frees up space in the office for more equipment or employees.
4. Choose Telecommuting
Telecommuting is a king with cost-cutting potential for many offices. While the world is crawling back to normalcy and offices are opening, this doesn’t mean that you have to force your workers to come in. It reduces utility costs, water usage, and even the amount of space required to settle employees in a central location.
By applying telecommuting strategies you can reduce travel and commuting costs, and even save time spent on travelling to and from office.
Yes, there will always be the need for workers to come to office, but only ask them to come on fixed days, or as needed. Just don’t forget to tell them to clear the desk they were using every time the leave. The next guy to come to office wouldn’t want a cluttered table to work on.
5. Eliminating Fringe Benefits
Many companies offer their employees perks and fringe benefits, these benefits include time-off allowances and equity packages.
For small businesses or newly founded companies, it is expensive and often leads to employee differences as some high-tech employees who are crucial to the operations are given more perks for retention while others are not. While this may lead to a sense of unhealthy competition within the office environment, it will also add to your expenses.
If you want to hire high-performing employees you can offer industry competitive pay and compensate their needs with target-oriented performance bonuses or health care benefits. These strategies will not only eliminate the cost of your unwanted expenses but will also introduce credible talented employees.
Cost-cutting is usually associated with startups and struggling businesses. That doesn’t mean if you are an established business, but small in scale, you don’t need to look into cost cutting options. You can always benefit from increasing your margins and this is what it is all about.
Each business will have its own specifics that may or may not give a significant saving, but in the long run, even the smallest of savings can build up to make an impact. It’s not easy too. It takes time, effort, and responsibility, and with time owners understand what their company needs and what their company should get rid of.
If you think that you have done your best already, you could always try a professional counseling when you want an expert opinion on how to manage your expenses and cut unwanted costs.
In the end, it is all about increasing your profitability, or be able to offer a better product or service cheaply. You just have to smart about it