Reducing expenses is arguably the quickest and easiest way to improve your small business’s profitability – especially if you’re operating on a shoestring budget.
Just think – In business, you can drive profitability by either bringing in more revenue or cutting expenses.
Typically, you can bring in more revenue by redefining your pricing plan or by adding new products and services your prospects and customers might need.
However, if the time isn’t right to change your pricing strategy or develop new products and services, the most efficient way to improve your bottom line is by cutting expenses.
So how can you quickly trim the fat and find the extra cash you need without feeling the pinch?
Keep reading to find out 5 easy ways to make cutbacks and save money in the long run.
Table of contents:
- Evaluate your office space
- Cut production costs
- Modernise your marketing
- Use the right technology
- Outsource tasks
1. Evaluate Your Office Space
The moment a small business moves its premises from the spare bedroom into rented office space, expenses can easily mount up and eat into profits.
- Sydney CBD – $1,038
- Melbourne CBD – $659
- Brisbane CBD – $662
- Adelaide CBD – $448
- Perth CBD – $607
- Canberra CBD – $437
If that sounds expensive, you should know that expenses can pile up even more due to poor space management when areas of the office aren’t being used effectively.
The problem with physical offices is that it’s hard to predict your office needs a year or two from now and know exactly how much space you will need.
So have a look at your current use of physical space and ask yourself whether you are wasting money on wasted office space.
Or, are you wasting money on office rent when you are actually able to operate remotely without physical office space?
One easy way to save tons of money is to switch from a traditional office to a virtual office that provides you with a wide range of services at a fraction of the cost.
For instance, here at B2B HQ, we provide businesses with everything they need to run properly from professional business addresses to landline plans to meeting rooms – with packages starting from as little as $1.36 per day.
2. Cut Production Costs
Optimising resources and cutting production costs is one of the biggest desires of every business.
Here are a few suggestions on how to maintain low production costs without giving up quality:
- Negotiate prices with suppliers and don’t be afraid to ask for a discount. Ideally, you should stick with a few trusted suppliers so you can stretch your dollar further. You can read more about the benefits of vendor consolidation here.
- Consider outsourcing instead of in-house production. Big name companies have relied on outsourced development for years to grow. For example, Skype worked closely with a team of developers in Estonia to help them build out their business. The team did such a good job that almost half of the company’s staff is now based in Estonia.
- Utilise technology to automate certain production processes. For example, you can use software to identify bottlenecks that are causing time delays. Or, you can use technology to monitor and track productivity and check whether your production process is lagging.
- Try selling leftover materials (e.g., cardboard, metal, etc.) instead of recycling them. Make sure you buy materials as you need them instead of ordering too much inventory. Excess inventory ties up cash flow while also creating storage issues.
3. Modernise Your Marketing
If you haven’t analysed your marketing strategy recently, you should know that in today’s digital world, you don’t need a huge budget to take advantage of the right marketing channels.
In fact, there are many ways you can market your business on a shoestring budget.
Ask yourself, are you spending too much on advertisements or trade show appearances just because you’ve always done it this way?
It’s easy to get into a rut with marketing and spend more than necessary on various forms of marketing that do not always generate high-quality leads.
Start by reviewing your marketing spending and look for areas that do not create value for your product or service.
You may be surprised to find out that you can get a higher return for less money.
Sure, you don’t need to eliminate paid advertising altogether.
However, you may want to focus your marketing efforts on more affordable alternatives, such as boosting your social media presence, asking customers to write Google My Business reviews or offering a referral program.
4. Use the Right Technology
Relying on technology whenever possible enables you to significantly cut expenses while also improving time management and productivity.
Start by assessing your business’s technology needs and avoid subscribing to software you don’t actually need.
Instead, make sure you have an accurate plan as to how to manage and grow your technology.
Here are some of the most important tools you should consider so you can run your business more smoothly and save money long-term:
- New hire onboarding: Make sure you create a successful onboarding experience by providing easy access to training content and resources.
- Employee management: There are many tools available on the market that allow you to monitor performance and manage core HR processes, such as payroll and recruitment scheduling, to name a few.
- Internal communication: To be successful, a business must encourage and improve internal communication between team members. There are several types of tools you can put in place to strengthen internal communication, such as collaboration tools, messaging platforms, surveys, and newsletters – just to name a few.
- Marketing: Using the right marketing tools enables you to compete with the big guys in the industry and make the most of your marketing dollars. Make sure you include in your marketing toolbox cost-effective platforms for email marketing automation, social scheduling, image design, and organisation.
5. Outsource Tasks
Some tasks are more affordable outsourced than completed in-house.
I previously wrote a post about the benefits of outsourcing for small businesses (you can read it here).
In fact, when tasks like bookkeeping or recruitment are outsourced you significantly reduce your labour costs while also reducing the time spent on these tasks.
This is because you only pay for what you use without paying for benefits or training.
So ask yourself, do you really need a full-time HR manager or content writer? Or maybe you just need them to complete a few tasks a month?
Ideally, you should outsource all small and time-consuming tasks so you can focus your own time and energy on your core business without the expense of recruiting, hiring and training in-house team members.
For example, B2B HQ provides businesses with highly-skilled, professional virtual receptionists to answer calls and resolve customer queries for a nominal monthly fee.
This means you are able to provide outstanding customer service 24/7 without the high price tag of an in-house receptionist.
While paying a dedicated receptionist can set you back by thousands of dollars each month (e.g., payroll, benefits, taxes, overhead expenses, etc.), virtual receptionists do not require any training costs or fixed salaries.
So instead of sinking your capital on in-house employees who perform basic tasks, it pays to outsource work to third-party providers.
Conclusion: By cutting unnecessary expenses, you are better able to manage cash flow pressures and allocate more money to where it’s truly needed.
Hopefully, the 5 tips I outlined above can help you make a difference in your business and increase your profitability.
Just imagine how far your business can go with the money it ends up saving on overhead! You could put all that money towards the growth of your company while also improving agility. If you’re looking to significantly reduce expenses, we have a range of virtual office packages available to save your business time and money. Feel free to contact us if you have any questions or concerns – We’d love to hear from you!