Abstract: Every business wants to cut costs,
but it sure isn’t easy. We’re talking about clear and substantial ways to lower
expenses, thereby strengthening cash flow and giving you a better shot at
strong profitability. Obvious places to slash costs — such as wages, benefits
and overhead — often aren’t viable options because the very stability of the
operation may depend on them. But there might be other ways to lower expenses
if a business owner digs deeply enough. Here are three ways to perhaps uncover
some cost-cutting opportunities.
3
ways your business can uncover cost cuts
Every
business wants to cut costs, but it sure isn’t easy. We’re talking about clear
and substantial ways to lower expenses, thereby strengthening cash flow and
giving you a better shot at strong profitability.
Obvious
places to slash costs — such as wages, benefits and overhead — often aren’t viable
options because the very stability of your operation may depend on them. But
there might be other ways to lower expenses if you dig deeply enough. Here are three
possibilities.
1. Study
your suppliers
Many
companies find that just a few suppliers account for the bulk of their
spending. By identifying these vendors and consolidating spending with them, you
may be able to put yourself in a stronger position to negotiate volume
discounts. This may also help to streamline the purchasing process.
On a
related note, how well do you know your suppliers? It might be a good idea to conduct
a supplier audit. This involves collecting key data regarding a supplier’s
performance to manage quality control and ensure you’re getting an acceptable
return on investment.
2. Go
green
Operating
an environmentally friendly company is generally a good idea and it might save
you money. Instead of purchasing brand-new computers and office equipment, you
may find refurbished items at substantial savings. Equipment and office
furniture that you no longer need may be sold to a liquidator or dealer. You’ll
not only make some money, but also free up the space you’re using to store and
maintain them.
In
addition, if you own the property on which you operate, research energy-efficient
upgrades to the HVAC and lighting systems. Naturally, there will be an initial
cost outlay, but over the long term, you may lower your energy costs. You might
also qualify for tax credits for installing certain items.
3. Explore
outsourcing and tech upgrades
Many
business owners try to economize by doing everything in-house — from accounting
to payroll to HR. But if the staffing and expertise just aren’t there, these
companies often suffer losses because of mistakes, mismanagement and wasted
time. Although you’ll obviously incur costs when outsourcing, the time and
labor it saves you could end up being a net gain.
Carefully
chosen and implemented technology upgrades can serve a similar purpose. Many
products on the market today are so robust and fully featured, upgrading to them
may be almost comparable to outsourcing. The same may be true with a customer
relationship management system that can help generate sales leads and allow you
to focus on your most profitable existing customers. Again, there will be an
initial cost that could eventually lower your cost of doing business.
Snip,
snip, snip
Lowering
expenses is often difficult, but keeping an eye out for ways to do it is
important, especially now that inflation is a major factor in the economic
landscape. Please contact us for help identifying and lowering your company’s
most “cuttable” costs.
©
2024