Small businesses and start-ups are always looking for ways to cut expenses. In fact, so are well-established companies. In order to increase profitability, you don’t always have to introduce radical changes. Small things like cutting costs wherever possible can improve your financial situation. When expenses are low, the profits are higher and this makes for a good business year. Cutting unnecessary expenses becomes even more important when resources are limited and finance is tight. This is the case for most new companies.
Cutting costs systematically and streamlining the expenses will help your financial situation. How can you reduce your operational costs without impacting either quality or performance? To answer this question we have some ways to reduce costs for an organisation.
1. Reduce Wastage
Every business produces scrap. Most of this is just thrown away. Have you ever thought how much you could actually save if the wastage were to be minimised? If not, it is time to do so now. Lowering wastage would mean you would need less of the initial amount of material. This will reduce your cost of procurement. Not only that, but it will also bring down the storage and disposal costs. Less waste, less money spent on storing and disposing the material. Most waste occurs because nobody bothered to check whether there was a process flaw, especially after the growth of a business. This is a case of mismanagement. Actively studying the cause of waste and taking steps to reduce it is a sure quick way to bring down your expenses.
2. Reuse Leftover Materials
Waste not want not! Whatever is leftover is not always a waste product. Sometimes all it takes is a little imagination to reuse it. Have you ever thought about how much waste there is in even the most traditional of processes, printing on just one side of the paper? Is there any rule that prevents you from printing on both sides? Or is it that you are just used to doing so? Think of office supplies like pens and markers. Instead of buying new ones every time why not buy their ink or refills? This small activity can reduce your monthly stationery expenses tremendously. Try to be a bit imaginative and proactive about the resources you use.
3. Recycle If Necessary
Everything left behind after processing is not always useless. A scrap for you may be raw-material for somebody else. Identify if your waste product or products can be used by some other company. If yes, you can sell it to them on a regular basis and make some extra cash from it. If you can use the scrap, it’s even better. You will have to purchase less of it next time.
4. Get Competitive Bids
Building business relationships is good. You need to have lasting relationships with your customers and vendors. But this does not mean that you allow the vendors to do wrong by you. You want to be faithful and for them to be competitive. Ask for bids whenever ordering something on a large scale. This way you will be able to choose the vendor who offers the best value for money product or service. Bidding will ensure that your current vendors will always be on their toes to try to give you the best deal. Competition is good for every business, big or small, new or old.
If you have been running a company for a while, you are well aware that everything cannot be done by you. Take, for example, Information Technology, you cannot manage it all. Storing data, protecting it, streamlining processes and keeping updated with the latest trends in technology cost a lot of money.
Setting up your own IT department is costlier than outsourcing it. Unless you are hiring a bunch of specialised people, there is no unicorn who is an expert at everything. Recognise where work can be outsourced and accept the fact that such jobs are best handled by IT professionals. There are many companies that can come to your aid for these kinds of work
As a business owner, you know that planning is necessary. Without a good action plan, the execution will be flawed and increase your operating expenses. This is because planning helps you to strategise. When you think strategically look to see if are you able to put your resources to better use, most of the time it is not a lack of resources, but a lack of resourcefulness. Strategising is necessary for all businesses. It will help you stick to your budget, get the work accomplished efficiently, make every dollar count and bring down operational costs or expenses.
7. Welcome Technology
Although we can all agree that technology is a necessary evil, without it most businesses wouldn't survive nowadays. Technology is here to assist you in getting more done in less time. In business, time is money. If you have more time on your hands you can use it to focus attention on the aspects where you get maximum earnings. Sensible use of technology will cut the cost of doing repetitive work. It will increase your efficiency significantly, and for the most part, at a single investment in capital for an ongoing advantage.
In short, you will be able to do much more with the same amount of time. Choose your technology partner carefully and give them a chance to understand what you want. Don’t let them steam-roll and dominate your work. Be open and transparent so that they can help you cut costs in a way that runs parallel with your ideals and business vision.
8. Increase Employee Efficiency
It is true that multitasking can work against you. You can still develop a workforce that has each other's backs and is comprised of multiple skills. Train them, educate them, empower them with the right tools and always have them reach out to find the right tools for the job. They are doing it day in and out and most of the time, know its downfalls and weaknesses better than you. When you are in a lightning growth period, you can ask them to step up their game knowing that you are not rushing their training. Such skilled employees are an asset to every company. When you have that busy month and the need arises you don’t always have to hire new people. You can simply reallocate work to free up these skilled employees to help you handle the tough and tight situations.
When you don’t have to hire new people your cost of training and acquiring new staff goes down you bring a new wealth of success into your existing workforce by being able to utilise your existing manpower in a better manner.
The Final Word
So many people in business call themselves an entrepreneur, the word is thrown around way to much. People say that if you are a business owner you have to think outside the box. What we have spoken about here hits right on that. Just because things are being done in a particular way does not mean you too have to follow everyone else's lead. Dare to be different! Keeping expenses to a minimum means that you are doing the best possible job of utilising all your resources. This helps in different ways to reduce costs for an organisation. When operational costs are down the margins improve. Improving margins, in turn, increase your profitability. Therefore, be open to change and if necessary be the change.
Contact a CHB Leader in Managed IT Support to learn more about IT outsourcing and other IT security solutions for your business.
Do you want to receive quality content about technology, business growth, life and mental health every week?