20 Effective Ways to Reduce Your Business Costs

Reduce Your Business Costs

If you’re an entrepreneur or business manager feeling overwhelmed with ever-increasing overheads and operational costs to keep your business going, you need to take a long and hard look at everything from your day-to-day operations to key business processes such as sourcing, production and delivery.

Controlling business costs is easy, provided you’re willing to make some hard decisions. To get started, use these 20 tips to organize and cut your business expenditure and increase your revenues.

 

  • Take a good look at your office supplies procurement system and discuss where you can cut costs. In addition, let your vendors know that you’re looking to make savings. Don’t hesitate to switch to suppliers that offer bulk discounts or better payment/credit terms.
  • Reduce your production costs. This is possible when you start recycling production leftovers, instruct your production team to minimize wastage, and make firm rules about efficient usage of electricity, fuel and water.
  • Redesign your administrative, production and storage space in a manner that allows optimal utilization of resources. Lease unused space to generate rental income.
  • Evaluate all your insurance policies with the help of an expert to ensure you’re adequately covered and are paying a fair premium. Share your concerns with your insurance company and business lender and ask if they can match a lower rate you found elsewhere.
  • Manage your time better, for time is money. Use software to manage employee productivity and eliminate distractions in the workspace.
  • Offer incentives for timely completion of certain projects and encourage staff to follow a productive daily and weekly schedule. Efficient day-to-day operation is essential to controlling business costs.
  • Minimize meetings—they can be such a time-waster for everyone involved. Don’t hold meetings unless for a specific goal and make them time-bound so that everyone can get back to work as soon as possible.
  • Ensure timely repair and maintenance of office equipment such as computers, printers, copiers, and so forth. This will enable smoother workflow and minimize disruptions in productivity.
  • According to John Vassos from CapX Solutions, it helps to hire a document management company that doesn’t work on incentives or quotas to push a particular brand to its clients. This means that you can expect the best cost-effective printing solutions tailored to your needs and budget.
  • Stop the extravagance. You do need to meet and entertain clients, but you can significantly cut down on such expenses by making smart decisions. For instance, choose a less expensive restaurant or café to meet a current or potential client. Find cheaper flights and hotels for work trips, and try and have virtual meetings whenever possible to save on travel costs.
  • Train your employees. Learning the latest techniques of doing the same work and automating some tasks can drastically reduce operational costs.
  • Utilize employee skills to maximize productivity and job satisfaction. Assign tasks according to individual skill set and ensure that people are happy doing their work.  Don’t burden people with unreasonable demands. Employee satisfaction is a crucial aspect of running a profitable business.
  • Use automated systems to reduce energy bills. When you have a large office with scores of employees, it can be difficult to control power bills manually. Installing an automated energy-efficiency system can help reduce your electricity usage by switching off lights and air-conditioning in empty spaces.
  • Befriend the cloud. Minimize in-house IT expenses by moving to cloud-based applications and outsourcing major IT tasks. This way you can optimize your IT infrastructure and do away with some of the hardware and software.
  • Outsource accounting and HR. It gives you access to industry experts who offer the full range of services and eliminates the need to maintain in-house teams.
  • Reduce paper and stationery usage. Print on both sides, for instance; reuse old or discarded paper; use smaller fonts; keep track of consumables; and make people accountable for wastage.
  • Purchase pre used furniture and equipment. If you run a transport business, for example, you can significantly cut costs by buying gently used vehicles for your fleet. You can also control setting-up costs by purchasing preloved furniture and storage equipment.
  • Reduce marketing costs by leveraging social media platforms, which costs way less than conventional advertising.
  • Explore outsourcing some of your core work to freelance experts and independent contractors.
  • Lead by example and show your employees how making small changes affects the business financially, impacts profitability in the short and long term, and in turn affects their own growth and opportunities.