In the category of somewhat surprising statistics, this one stands out: nearly half of small to medium-sized business enterprises have not reviewed costs in six months or more. According to Clydesdale and Yorkshire Banks, nearly 14 percent have never reviewed their costs. Yet, they’re still in business, although their profit margins may not be all they could be. Profit is the goal of nearly every business, after all, and smart companies review expenses routinely and make adjustments as necessary in order to prop up the bottom line. It makes good sense.
Where does it go?
There are some relatively simple ways to save money. First, though, what constitutes the greatest amount of cost for a business, outside of staffing and personnel expense? The top five are usually materials and supplies, rent, fuel, energy costs, and IT software. Nearly a fifth of small business enterprises say that these five comprise at least half of their total cash outlay. Knowing what you spend and in which areas constitutes the first step toward a savings plan.
Assuming that you are under contract for certain expenses, including the space you occupy (rent), and have commitments for other specific items, where can you look for possible monetary savings? There are five possibilities:
Packaging and Shipping
With recent increases in parcel shipping charges, you must pay close attention to packaging your product in the right sized box in order to control costs. British buyers are the world leaders in online purchasing, and if you ship products to customers, your profits are affected with every price increase. Since delivery charges are always on the increase, you really need to know your stuff. The Royal Mail introduced a new system for pricing in April 2013; this resource will give you all the information you need to make an informed decision about the management of spending on packaging and parcels.
Be Energy and Utility Smart
Energy savings can be elusive, but simple strategies can often slash costs very effectively. Turn off lights and all equipment except during business hours. Closely monitor water usage and fuel purchases; check all bills and renegotiate contracts at the end of their terms. Pay attention to travel expenses; combine trips when possible.
Outsourcing and the Cloud
As counter-intuitive as it may sound, a small business can often save cash and time by letting an outside provider take over tasks that do not need your personal attention or expertise. IT duties, human resources needs, even payroll accounting, represent some technical tasks that require time, energy and a level of understanding that you and your staff might not possess. Turn these duties over to qualified outside experts and utilize your time to better advantage in areas directly related to your business.
Another way to streamline your in-house operations and assure quality data management is to embrace cloud computing. Not only does the technology support efficiency, but it also eliminates the need for expensive, energy-hogging on-site servers and hardware. Be sure to shop around and weigh the pros and cons.
By utilizing cloud-based accounting software, you not only save initial cash, but you also eliminate the need for updates, security, backup and storage as well. It’s outsourcing, energy saving, cost effective and efficient all in one package, which allows you to concentrate on the very important task of running your business. Find additional information here.
If you are open to new ideas, new procedures and new products, you may very well find that you can slash some costs effectively by shopping around. When contracts are up for renewal, such as janitorial services, snack suppliers or window cleaners, compare prices and be open to special offers or “packages”.
You might also consider flexi-time arrangements with employees, allowing some to work from home for a portion of the week, or perhaps even job-sharing arrangements, where two individuals might share one job and one desk at different times. Consider temporary employees at peak seasons, or contract workers for special projects. Consider a staffing service for those needs.
Skype and Social Marketing
A product of the digital age, Skype has revolutionized person-to-person communication, and decreased the need for frequent face-to-face meetings. The savings in terms of travel costs and time are evident, and you will reap benefits in increased productivity, less down time, and more effective communication and record-keeping as well. An additional benefit of using this free chat service is the increased personalization it offers; and it positions you to be able to expand your market to worldwide reach if necessary or desired.
When you need to shake hands to close a deal, by all means schedule a personal meeting. But, for routine updates and planning meetings, Skype and Face Time, or even a simple conference call may meet your needs just as well.
Embracing technology in all its forms can not only boost your visibility, it can enlarge your market, increase productivity and save real money. You already know the major advantages of social marketing, but if you are still using other methods as well, consider phasing out print advertising, direct mail and coupon advertising, and anything requiring paper, printing and postage. It’s a digital world, and you can position your company for success while lowering your costs at the same time.
Whatever actions you take to save money will be reflected on your balance sheet. Managing every penny can be a difficult process, but knowing in general terms where your money goes is vital. Browse these additional strategies for implementing cost savings; you’ll be the richer for them.