It has been a tough year to do business with the COVID-19 pandemic pulling the world to a standstill. As a business owner or decision-maker, it is perhaps the best time to ring some changes to keep the business afloat amidst the storm. One way to do so is by trying to cut on your business expenses. The problem, though, is cutting costs without compromising the quality of your products and services. The answer is in developing strategies to reduce other expenses in a smart way. This guide expounds on some ways to cut business overhead costs without compromising quality.
Cut on Utility Bills
You might know that utility bills like electricity can take up a big chunk of your money. It is perhaps time you do something about it. Yes, you can find cheaper alternatives. For example, according to Michael Dinich of ‘Your Money Matters,’ they were able to cut their energy utility bills by up to 40% via solar and energy-efficient lighting.
This strategy not only reduced the firm’s production cost without affecting the product but also added value to the firm as they showcased their environmental leadership position to its customers. It is also the best time to change some habits. For example, take simple steps to reduce energy utilities like switching off the lights and other equipment when they are not in use. You can also use thermostat controls to help cut energy bills by turning down your conditioning systems when it is not needed. Having a utility bill management system can also save you money by ensuring you don’t pay costly late fees.
Go for cheaper suppliers
One other clever way to reduce the expenses that you use on suppliers. You might want to start looking around for a cheaper supplier. You might find that there are some suppliers who could be as good as the ones you are spending more money on. The same applies to insurance cover and the likes. You can opt for cheaper insurers or reduce your employees’ benefits as long as it does not interfere with your employee’s morale or the business’s vivacity. Alternatively, you can renegotiate with your current supplier for lower prices.
Outsource services
As a small business owner, there are processes like IT and bookkeeping that you might not afford to handle in-house. Instead of hiring a full-time employee or spending a lot on infrastructure, why not outsource from service providers at reduced rates? For instance, you can seek IT support that can be relied upon from a managed service provider. It will save you a lot of salary and equipment expenses. You will get access to pro-level skill sets at reduced rates plus you will get to focus on your business functions and let the service provider worry about the rest. Similarly, for bookkeeping needs, you might consider outsourcing to a professional company like My Remote Quality Bookkeeping. This way, you can ensure that your financial records are handled efficiently without the hassle of managing repetitive tasks yourself. Outsourcing these services can greatly streamline your operations, allowing you to run your business more smoothly and effectively.
Make bulk purchases
Purchasing bulk quantities reduces the cost per unit, and in the long run, you will pay less for your product, which helps cut on expenses. Also, if you are shipping your product, bulk purchasing cuts down on your shipping cost as you will not require to reorder, in which case you would be required to pay for shipping again.
A few things to note, though. Before purchasing a bulk product, ensure that you have enough storage space. Also, bulk purchasing is more ideal for non-perishable goods. If you buy perishable goods in bulk, ensure that you have the appropriate storage equipment like coolers and freezers lest they go bad, and you will end up spending more to repurchase. Make sure not to purchase excess products as they may end up going to waste.
Buy second-hand equipment
Many business people tend to shun second-hand equipment due to the mentality that they could have a short life span, or they lack in quality. Well, not all second-hand equipment is bad; you only need to shop carefully. For instance, instead of purchasing new office furniture or a printer, you can shop around for the high quality, gently used ones. You may find that a company is upgrading or closing and their equipment could be as good as the new ones. You will spend less on equipment and insurance cover and avoid the initial depreciation of the equipment. Again, it is just a matter of shopping smart!
Cut on time wastage
As per the common saying, ‘Time is Money,’ you need to move things faster to cut on some hidden expenses. For example, wasting time increases the production cost as less is done with more time. Think of it this way, you end up paying your employees for less production! So, ensure that your employees are skilled in their tasks. Allocate the best-trained employees in essential posts and identify your employee’s training needs and then invest in training them. In the long run, you will save costs as you will spend less on correcting errors and use less time to produce more.
Wrap up
Cutting expenses is paramount in maximizing profit in a business, especially in such a tough time. That said, be careful not to compromise the quality you deliver to the consumer as it can affect your brand. Remember, if your brand is affected, you may end up making losses in the long run!
Founder Dinis Guarda
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