Every business has taken a hit during the pandemic. Some have had to temporarily halt all activities while others transitioned to working virtually. However, every business has had to cut costs. For some, the situation became so dire that they had to close down completely while others are limping along, uncertain of what the future holds. Organisations that were not prepared for such a disaster pruned the spending that they could reach easily – wages. However, scrimping on pay when everybody is going through a hard time isn’t great for employee morale and, as a result, for your business. Pandemic or otherwise, there are effective ways to cut costs and optimise your business. Let’s take a look at a few of them.
1. Vendor expenses
Working with suppliers and third parties is essential for any business. Negotiating with vendors to work out better prices is one way to reduce business expenses. Whether you’re paying for raw material or insurance, reach out to the provider and see if they are willing to work out better terms. Make it clear that you are considering other options because your bottom line is the top priority in a difficult economy.
2. Technology update
Most businesses today rely heavily on technology. If you’re using old and outdated tech, you’re probably spending unnecessary cash on maintenance and wasting a lot of time as well. Consider shifting your operations to the cloud instead of taking the effort to build and maintain data centres and the requisite software. Maybe your employees can work just as well with tablets instead of bulky desktop computers, which have multiple components and cost more. Alternatively, you can look at shifting some of your efforts in-house if multiple outsourced tasks can be assigned to one or two people who will work on them full-time. Collaboration tools can also be a great asset to speed up work and reduce hassle for your employees, thus cutting costs in a business.
3. Embrace virtual work
There’s a reason why so many companies have jumped at the opportunity to let their employees work from home indefinitely. It goes a long way in business expense reduction. Your people don’t have to travel for meetings which saves travel, stay and food expenses. Transportation expenses are eliminated. While some organisations have let go of office space, even those that have held onto their leases have spent less on electricity and other perks that are provided at work. Even employees appreciate not having to waste time commuting and paying an excessive amount as rent to stay close to the office.
4. Overhaul marketing
While you shouldn’t dismiss paid marketing that has shown results, it could be worthwhile to take a look at the channels you use. Gone are the days when television and newspapers were the only way to reach your audience. With the advent of social media advertising on Instagram, Facebook, LinkedIn, Twitter, YouTube etc., you can cut costs in business while getting more in return. These apps allow you to refine your target audience so you can target potential customers better while also providing you with metrics so you can change and improve your strategy. Another path is to network with your current clients and incentivise them to refer new ones. People are more likely to go with a name they recognise, and there is no better advertisement than a satisfied customer.
Another great way to reduce business expenditure is to outsource some tasks. This can involve bringing in freelancers or hiring interns for simple or mundane tasks instead of paying full-time employees and spending on benefits. Sometimes, entire functions can be outsourced. Employers of record firms, human resource solutions etc., can cost less than performing the tasks yourself.
6. Product and production
Use the physical space that is available to you effectively. Overflowing storage, inefficient placement of equipment etc., are common space wasters. Centralize functions to get the maximum use of real estate and consider leasing out excess space to cut business costs. Selling leftover raw material could bring in some cash to prop up your numbers. Streamline and automate processes to save time and money. Eliminate products that aren’t doing well and utilise the freed up resources to improve the quality of other offerings or to explore new avenues of business.
Effectively reducing business costs isn’t too difficult. With careful planning and budgeting, your organisation can cut spending too. The first step to do is to track all expenditure and analyze it. While this can seem simple and easy, it might throw up surprising results. In fact, just doing this will help you take a few measures to reduce business expenses. Reach out to us to see how we can help you automate your HR processes and save costs.