Wednesday, July 6, 2022

How To Cut Business Costs

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Many people do not realize that it is easier to cut your business costs than you might imagine.  While there is no way to completely eradicate the costs, you will be able to reduce them significantly by making a few changes.  If you are unsure where to start, there are some helpful tips that can reduce your operational costs while boosting your profit margins.

Go Paperless

It is the little things that add up when you have a business like the cost of paper, stamps, ink cartridges, stationery and filing cabinets.  This is why you should look at using email whenever you can, particularly for simple messages like a greeting to a new client or a request for a vendor.  You should also look at installing software that tracks the printer usage and identified which departments in your business need to improve.

Negotiate With Your Suppliers

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Most of your suppliers are going to be open to negotiation.  They do not want to lose your business, but you will need to remind them of your track record of past purchases or give them a sales projection.  You should also consider talking to multiple suppliers to encourage a bit of competitive pricing.

Reduce Your Energy Consumption

Installing a smart meter allows you to keep an eye on the amount of energy you are using.  You will be able to get real-time readings from the digital display or the online portal. This will give you a better idea of what your energy bill is going to be and you can determine which activities are using some unnecessary energy. Here is a good post that goes through 20 ways to go cut down on your electricity bill.

Review Employee Roles

You need to think about your people.  While employee reviews are generally a touchy subject, they will lead to some of the biggest gains when you need to cut costs and they provide valuable insight.  When you do this, you might find that an ongoing take is no longer needed or that 2 roles could be combined into one.

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Hire Contractors And Freelancers

Are you in need of a particular skill set for a project?  Outsourcing the work and bringing someone in temporarily is better than a permanent posting.  You will not have to pay a full-time salary along with benefits. Instead, you will be paying an hourly rate until the project is complete.  

Hire Some Interns

Interns can be good for both parties.  The intern will get practical experience and you will get a temporary and low-cost employee.  While there are monetary benefits to doing this, you will also be able to find some of the best young talent in your industry.  

Change Your Phone System

Using a traditional landline can be expensive.  You need to look at taking advantage of virtual phone services such as Skype which allow free phone calls when you call another Skype user.  This will save you a lot of money in the long-term, particularly if you need to make long calls or international calls.

Pay Your Invoices Early

The faster you pay your invoices, the more you are going to be saving.  There are many suppliers who offer discounts if you pay the invoice within a few days of getting them.  This will also help you build trust and long=lasting relationships.

Get Used Equipment

As we live in a world where technology is always changing, you will get big discounts on used hardware and software which still works to a high standard.  It is important to note that some products will become significantly cheaper a few months after their release.

Relocate The Office

You need to take the time to ask yourself where the best location for your business actually is.  It might be where you currently are. However, costs such as rent and commuting will vary from one location to the next.  If you are going to be moving your business, you need to ensure that you do your research before committing.

Get A Virtual Office

There are many businesses that are not dependent on a physical office.  If you are one of them, you can convert to a virtual office and have your employees work from home.  With no office, you are going to eradicate some of your largest overhead costs.  

Review Your Business Insurance

If you have a business which has changed or grown, your current insurance might not provide adequate coverage.  It is important that you look at your police before renewal and meet with the insurer. When you do this, ask them what is covered and what your policy limits are.

Negotiate A Lower Credit Card APR

Credit card companies and banks are also open to negotiations.  If you borrow money on a credit card, you can call the company and see if they will reduce your interest rate.  The worst scenario will be that they say no.

Review Your Card Machine Provider

Better rates will mean better savings.  If you take credit card payments, you need to look at the terms of your merchant account.  This should also be done when you only accept online payments.

Reduce Your Inventory

While getting a single large shipment might seem like a good idea, tying up your working capital in inventory is something that you might want to avoid.  It is important that you find the right balance. This can be done with inventory management software.

Cut Down On Meetings

Take the time to look at your calendar and that of your employees.  You might be surprised with the amount of time spent in meetings. You should then consider the benefits and cost to your business.  Reducing meeting time will help you free up time for completing tasks.

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