Running a retail business is not a walk in the park – there are many things an entrepreneur needs to take into consideration and sometimes making ends meet can be challenging. This is why reducing costs is often the most practical way of ensuring you have enough funds to keep the business going.
Since most business owners dream of expanding their business, the question of finances becomes even more important at some point. So, here are some valuable strategies to reduce expenditure without compromising the quality of your products and the production process.
Know your finances in depth
The first step to changing your ways when it comes to expenses is to know where you stand. Your retail business’s financial state cannot be improved until you analyze your income and expenses in detail. An audit of your expenses will show you where your money is going so you may conclude if it is allocated in an optimal manner.
Namely, you may find some cost that is being taken of your budget each month and which is not necessary. Check your inventory as well to assess whether there is some resource that could be put to (a better) use. You may also learn that there are some items which are rarely utilized so you can then take them off your list of monthly purchases. Getting rid of unnecessary expenses is the beginning of reducing the overall costs of your retail business.
Introduce automation for repetitive tasks
It may seem irrational to make an investment when you are trying to cut costs but automation is a strategy worth investing in. Repetitive tasks are especially detrimental for your marketing team because their creativity is lost in the haze of doing the same menial tasks. They will be grateful for software to schedule social media posts, newsletter and email sending, etc.
In addition to that, you can automate the entire payroll process and ensure there are no mistakes in cases of paid time-off or parental leave. Monitoring the shipping process, uploading tracking numbers, managing inventory is all facilitated with automation, not to mention invoicing and other administrative tasks. By providing your employees with the right tools and apps to tend to the repetitive duties, they will be much more efficient and it wouldn’t take long before you return the invested sum.
Save by spending
This also probably sounds like an impractical idea but just as automation, this one is a real gem for retailers. You may cut your costs as much as you would like but spending is inevitable. You need to obtain supplies, take care of your employees’ salaries, pay for electricity, and other bills.
However, your credit card doesn’t have to be only a tool for paying for all those expenses. You first need to apply for a credit card that suits your spending pattern, after which you can enjoy welcome offers, earn points, air miles, vouchers, and gifts. This means, that, for example, if you travel often to meet with clients, partners or suppliers, it would be wise to choose a credit card that earns you free miles. So, you only need to opt for a card that is compatible with your business needs and let it save you money on future expenses.
Outsourcing is a highly effective strategy to go beyond local talent and have experienced individuals perform certain duties. Instead of employing full-time employees for tasks that you need to be handled from time to time, it is better to hire an external team or an individual for those occasional assignments. Simply put, it is often the most cost-effective way to get something done.
Also, you won’t need to invest in additional training of your current employees and you won’t have to think about their expertise at all: you only need to assign them the task and you will get experienced professionals on it. Outsourcing companies cannot put their reputation at risk by underperforming which is why you can expect their top experts taking care of the business task you paid them to perform.
Decrease the shipping expenses
If you aim at expanding your retail business as well, chances are that you are not only operating locally but that you are also sending your products to other cities and countries. Offering your goods internationally can be very lucrative but it can also cost a lot. To maximize your income, you need to optimize shipping costs.
For starters, think about the packaging – fragile products need to be wrapped and put in hard boxes but those less fragile ones might be transported by being tightly wrapped and put in a regular cardboard box. Also, if you use external shipping service, make sure the one you choose is reliable because every delay or damage to the parcel will cost you.
The digital revolution has shaped the modern way of conducting business and it goes without saying that all of the important data are saved in the digital form. The benefits are obvious: you save money on piles and piles of paper (which is also eco-friendly!), as well as the time needed to find the necessary information.
Also, you save money on storage space that would be otherwise taken by rows of shelves that would hold the documents and files on your sales records, suppliers, etc. In case you have probably already understood the benefits of digitalizing your data, you should make the additional effort of going completely paperless. That also includes notes and presentation materials for which paper is still commonly used.
Before you decide to introduce any cost-cutting strategies, you need to learn the real state of your finances. You can decide to save with a carefully picked out credit card, software solutions, by decreasing the shipping expenses or by combining two or three of these strategies. If you are persistent with these changes, after some time, you will be able to plan what you will do with the money you saved.
Jacob Wilson is a business consultant, and an organizational psychologist, based in Brisbane. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for Bizzmark blog.