For young or struggling businesses, every day that your doors are open can feel like an outflow of cash. While you aim to earn enough to cushion your organization, high operating costs can mean treading water simply to keep up and break even, let alone make a profit.
Running a business is more expensive than ever, especially in certain industries like retail, dining, and medicine, but operating costs don’t have to drain your bottom line. Follow these ten quick tips to reduce costs and save money—all without negatively impacting the client experience.
1. Shop around for suppliers
Believe it or not, your longest supplier relationship may actually be your most unfairly priced, as they no longer feel obligated to earn your business with competitive rates. In that case, terminating your relationship with said supplier to pursue a cheaper option isn’t brutal—it’s business. Shop for competitors to your current suppliers, starting with your greatest expenses like personal protective equipment or printer paper.
2. Go big box for office supplies
Just about every industry needs office staples—for example, staples. Besides being some of your most basic supplies, they are also the ones you deplete the fastest. Order these essentials in bulk from big box retailers to get some serious discounts, and only order periodically to save money.
3. Cut down on supply orders
If you find yourself overstocking and underutilizing inventory, you could save money by reducing the product quantity of these orders. While having a supply surplus can offer extra assurance, converting too much cash into inventory may limit your ability to pay other expenses. Instead, determine ways to optimize the resources you have and delay orders when possible to save money.
4. Cut unnecessary hours
The forty-hour workweek may seem like a necessity, but if your organization experiences frequent lulls and slow periods, you may be able to reduce operating or staffing hours. Not only can this lower your payroll costs, likely one of your greatest expenses, but it can also minimize productivity loss. According to an article on Indeed, employees who work more flexible schedules experience higher morale and less stress, potentially leading to improved productivity.
5. Set performance parameters
Restructuring your business’s or staff’s hours can save you money, but without specific parameters in place, your employees will have little guidance as to how to achieve maximum efficiency. In absence of these markers, people will often default to low effort. Establish specific daily or weekly quotas, and set challenging deadlines to long-term tasks to spur employees to optimize their time. Certain incentives like prizes for top performers may also be tax-deductible, and they can spur slacking employees into action.
6. Find competing policies
Your insurer may be offering you the best rate they can, but one of their competitors could offer lower premium costs for the same level of coverage. Shop with competing insurers, and request an introductory rate to potentially save hundreds of dollars per month. You should also review your current policies to ensure you aren’t overpaying for duplicate coverage or an unnecessary liability level.
7. Observe your competitors
Direct competitors in your area may be applying resources in some surprising and industry-specific ways, which could include streamlining their workflow or slashing resource-guzzling services that are less profitable. Do some research online or in-person to evaluate their cost-reduction practices and determine which measures you could utilize in your business.
8. Drop unnecessary debts
While expansion, high-tech equipment, new services, or similar pursuits can pay off, the ensuing debt may not only affect your business rating but also stifle your cash flow. Of course, you can’t simply back out of a loan, so consider cutting your losses now and terminating unprofitable expenses so you don’t continue to accrue more debt. Assess your company’s performance in the latest quarter and year over year to determine which segments, if any, you could eliminate to improve your finances.
9. Save on real estate
You may be paying for more space than you need to operate, including non-usable real estate like a large yard, an oversized lobby, or excessive storage space. Consider relocating to a smaller office, taking some your business practices to your home office, or even moving to a virtual platform, which are more comprehensive than ever. In fact, Upwork projects that by 2025, over 36 million Americans will work remotely. So depending on your industry, the only property you may need are a PO box and an email address.
10. Invest in professional assistance
If you need more assistance finding ways to cut costs, consider temporarily requesting the services of an accountant or business strategist. They can evaluate your financial records and business practices then help you identify inventive cost-cutting measures. These experts are in the business of saving you more money than they earn, and their individually catered advice could be the secret to you implementing more frugal practices—and keeping your organization afloat.