Every business should be looking at how to drastically cut expenses as long as those cuts make sense to the long-term growth of the company. This is especially true with internet based businesses that can easily use outside software solutions and outsourcing to lower costs and free up time. However, taking the time to analyze your expenses is something every business and brand should do, but most don’t do it often enough. That said, many companies can be hesitant to do so for a variety of reasons.
In the following article, we’re going to be discussing the seven areas that most need scissors attention. First, however, let’s explore the mindsets that keep businesses from making the necessary decisions to slash those costs and regain profitability.
What Holds You Back?
As a blogger and business owner, you often can know what to do but be hesitant to actually do it. Why is that? Well, it’s up for interpretation, but our experience tells us it has something to do with the following three reasons.
Perhaps the business is too good. Things seem to be moving along smoothly, and why upset the apple cart if you don’t have to?
Complacency can be particularly dangerous in business because, as most company owners know, times aren’t always great. Lean years do happen.
If you haven’t planned for them when times are good, you could be finding yourself making some more painful decisions when the hammer drops. Take care not to get complacent. Review all expenses on a regular basis.
Not Knowing Your Options
You know you need to cut expenses. However, like the cleaning person who doesn’t know how to start picking up a messy room, you have no idea where to begin.
This obstacle occurs because you get too wrapped up in the day-to-day operations and never find the time to slow down. Those slowdown times are important, though. They keep you thinking about how to improve your processes company-wide.
Fearful Decision Makers
Getting frozen like the proverbial deer in the headlights is a common trait of poor managers. If your business is stocked with these types of personnel, it can be hard making the right decisions that lead to proper expense management.
Now that you know what’s likely to hold you back, it’s time to think about what you can do about it. Outside of replacing your entire staff and rebuilding from the ground up (usually a bad idea), we recommend focusing on the following seven areas.
1. Reduce the Size of Your Workspace and Business Overhead
One of the first places to look when it comes to how to reduce business costs is the workspace and other physical components of your business. Particularly, you’ll want to see about cutting out things with ongoing operational expenses.
Getting rid of your office may not be practical, but you might be able to relocate to a smaller and cheaper facility. Technology has made it easier than ever before to work remotely.
Furthermore, things like vehicles and office supplies can be reevaluated. These always need to be replaced at some point, and vehicles continue costing you money throughout their lifespan. Those costs can greatly fluctuate depending on fuel prices.
If you can’t get rid of your vehicles, you can see about switching to CNG for lower fuel expenses. You also can reevaluate your office supplies contracts.
2. Look at Staffing
Another significant area for cost reduction is your staffing. This cut is probably going to be your least popular, too, because it affects the livelihoods of everyone on your payroll.
For that reason, you’ll want to use some hesitation before pulling the trigger on job cuts. One way around cutting your employees is to look at benefits packages or furloughs.
Doing so could put you at risk of losing them to a higher-paying job. That said, it could be your ticket to keeping talent through especially rough patches.
3. Improve Your Marketing Efficiency
Another business cost reduction is to look at how you’re marketing your business. Are you investing in a lot of print materials or high-cost keywords for online marketing campaigns?
Consider investing in some SEO research, partnering with a marketing agency skilled at bringing in results, and using the power of organic search through Google and the various social networks. Organic “wins” are safer bets for when you decide to put some money behind your marketing.
As a result, you end up getting better results for less money. That’s marketing efficiency in a nutshell.
4. Switch Web Hosting and Service Providers.
A quick trick for how to spend less on business is to look at your existing web hosting, SaaS and ongoing monthly costs.
Here’s a quick example of how this works.
You signed up for web hosting and got a nice 50% discount on your first year, but that discount isn’t recurring. Your hosting plan could be costing a lot more than you think.
The same holds true for list hosting plans and many other subscriptions that you are probably paying for on a daily basis.
A quick way to analyze your existing costs and lowering them, is to look for monthly and annual billings that might play out just like these examples.
5. Get Creative With Outside Services
Some things you’re paying for might be worth reconsidering altogether. Instead of forking over your hard-earned revenues, why not work out a trade where mutually beneficial?
You also might consider contact center outsourcing services for help in reducing costs compared to having staff take care of these calls in-house. Many things can be outsourced at a better rate than what you’re currently paying.
6. Reexamine Your Storage Options
More cost-cutting for businesses might involve reevaluating your storage options. For example, some companies have so many physical records that they’re forced to store them in a separate facility from their home offices.
What would be the cost of converting these to digital and investing in cloud storage instead? Being able to shed physical real estate ensures savings, and it better protects your data for the long term.
7. Investigate Your Processes
Audit the way you do things regularly. You never know when technology or research will lead to a better understanding of what your business should and shouldn’t be doing.
Continue to educate yourself on your industry and your internal corporate practices. The more you do, the better off your bottom line will be.
Learning How to Drastically Cut Expenses Will Set You Up for Success
Hopefully, this look at how to drastically cut expenses will prepare you for better returns and healthier books. Best of luck!
For more business tips and info, check out some of our other posts.