If you simply think about cutting expenses alone, then you’re going about conserving your funds in the wrong way. In addition, you’re likely to create headaches for yourself, such as damaging your brand image and disrupting the quality of your products and services.
A smarter way to cut your business expenses is to reorganize your business to make it more efficient and productive.
When you look at lowering your business expenses systematically, you’ll notice something interesting: this approach not only improves cash flow but also improves the quality of your business operations.
Naturally, the better you run your business, the more money you will make and the faster it will grow.
The key idea to keep in mind here is this: if you can cut your business expenses strategically, you’ll improve the quality of your business.
Some rather straightforward ways to do this include outsourcing technical work, increasing the efficiency of business operations, and decreasing overhead costs by identifying and eliminating waste.
Let’s take a closer look at these various options.
- Outsource technical jobs.
You don’t always need to hire full-time or part-time people for everything. You can outsource some of your work. Certain work, specifically technical work that can be done online, could be delegated to independent contractors.
You can save a considerable amount on your labor costs by hiring people from all over the world. Many are subject matter experts at the technical work you need to get done.
Consider using global employment services to find workers overseas. They will find people with the technical skills that you need for high-quality work. Often, you can hire someone from another country at a lower fee because of the economic discrepancy between different countries.
Start outsourcing in a small way to familiarize yourself with the process.
To ensure high-quality work, don’t simply hire someone because of the lower cost of hiring them. You also need to screen them. Do they have the knowledge and skill you need to get the job done quickly and well? Carefully review portfolios of promising candidates and ask for samples of their best work.
- Improve the efficiency of your operations.
You may be wasting more money than you realize on inefficient operations. Review your most important business operations and brainstorm ways that they could be done quicker, cheaper, and more efficiently going forward.
Here are some examples of what to review:
* Compare the price of the different vendors who supply the goods or services you need to run your business. Is it possible to switch vendors? You may be able to get the same or similar goods or services at a lower cost.
* Notice if you have too many unnecessary steps in some of your business processes. This could be a waste of time and money. Is it possible to streamline this business process?
* Evaluate the productivity levels of your staff. Is it possible to boost productivity by providing in-house training? Although this would initially increase costs, a more skillful team will do everything better and faster. This, of course, will improve profits.
- Reduce wasting money on unnecessary overhead costs. Your business may be spending more on overheads than necessary. Do a line-by-line analysis of your overhead costs to detect waste that you can either minimize or eliminate. For example, perhaps energy costs may be unnecessarily high because you are using antiquated lighting systems or your trash collection could be changed to bi-weekly or monthly because you focus on additional recycling and sustainable kitchenette and bathroom products at the office.
Think of ways to go green. For example, by getting solar panels installed, you could dramatically reduce all your energy costs.
Besides improving energy efficiency, there may be many more instances when you overlooked creeping costs. For example, you may never have taken the time to notice how much money you were throwing away on things that you didn’t need at all.
The Bottom Line
When you tally up how much money you save by taking these three steps, you might decide to review your business costs quarterly.
If you don’t periodically monitor creeping costs in a variety of things–things like labor efficiency, supplier pricing, and wastage–then you will be increasing costs and reducing profits.