You’d be mistaken for thinking that the number one way to increase profitability is to increase sales. Cost cutting is actually a far more effective way and it’s also much easier. Before you focus on increasing your revenue, it will pay to spend some time looking at ways you can cut costs and improve efficiency. Here are 7 easy ways you can cut costs and improve your bottom line.
- Cut Staffing Costs – if your business doesn’t run at full speed 7 days a week you might want to consider looking at ways to reduce staffing costs. Discuss having unpaid time off with your employees and see if any of them are interested. If possible, invite family members into your business when you need a helping hand.
- Barter for Goods and Services – in the early days of your business enterprise bartering was depended on. Just because we tend to use money nowadays doesn’t mean there isn’t still a place for non-monetary exchanges. There are limits as to what and how much you can barter but it is an option worth exploring if your budget is tight.
- Reduce Energy Costs – there are many ways you can reduce your business energy costs. Use a programmable or smart thermostat, solar water heater, light-blocking blinds and curtains, double-glazed windows, and make sure doors and windows are adequately sealed. It can also pay off to shop around for a cheaper energy supplier. To find the right provider and plan for your company you will want to use an online comparison tool to help you switch business energy suppliers successfully.
- Cut Advertising Costs – more and more customers are choosing to shop online which means the more traditional forms of advertising such as newspaper ads, fliers, business cards, and posters are not as effective as they used to be. Thankfully, there are far cheaper and more effective ways to advertise your business. Build your online presence by creating a website and a Facebook page. Use Twitter to tweet about your business and create a regular email newsletter.
- Encourage Remote Working – more and more employers are considering remote working because the potential for cost-cutting is tremendous. This kind of working practice also improves staff morale and job satisfaction, thereby increasing productivity. Remote working also reduces utility costs, the amount of space required, travel and commuting costs and time lost commuting and traveling.
- Buy Used/ Second-Hand – there really is no need to buy new equipment because there’s lots of used and second-hand equipment that is almost as good, but a fraction of the cost.
- Pool Resources – when you’re running a small business it’s not always possible to buy in bulk. There is, however, a way around this conundrum. Pooling your resources with other small business or like-minded companies is going to help reduce recurring costs. Consider membership of a buying group, trade association or local business network. There may also be cooperatives you could participate in.
When you’re running a small business you face many unique challenges, however, the burden of ever-increasing operating costs is a common one. Making small changes across various aspects of your business and avoiding unnecessary purchases and expenses are always going to be of benefit in the long run.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.