5 Tips To Reducing Operating Cost For Small Businesses
Mar 19, 2020 19:42
Whether you are running a small business or starting a business for the first time, you are probably wondering how to cut your costs and increase your profit margin. The ability to do this is the only to remain profitable as we aim to grow our business steadily. While so many small business owners achieve this by slashing a lot of things out of their budget monthly or annually, that is not the only solution and is often even the wrong step to take.
Operating costs are not just recurring, they are also very often mandatory to running the business at maximum capacity. This means that as business owners we have to look for ways to tweak what we have and implement alternative and cheaper solutions to what we have. Cutting your operation costs and still running an effective and profitable business is an art and these few tips will help get you started in mastering that art.
1.Scrap Unused Services
Whenever we set up a business, we are often coaxed into subscribing for a thousand and one services that seem useful at the time, but continually shrink in their usefulness as time goes on. One of the first steps to cutting cost is to look within at all the services you are currently subscribed to as a business and consider how valuable they are to you.
Way too many small business owners just put all their subscriptions on auto-pay on their credit card and pay repeatedly for a bunch of softwares and services, when some of them may have decreased value.
If you haven’t used any of those services in two months or more, consider cancelling them altogether. You probably don’t think it will make much difference, since it’s just a monthly subscription of $2, but in 5 years, you would have lost quite a bit from that little leak. Plug it now.
If you feel that one or more of them might still be useful, consider taking up cheaper alternatives since it is a once-in-a-while deal anyway.
2.Switch To Cloud VoIP
The main reason business owners switch from regular telephone and communication measures to Cloud VoIP is not because it is the in-thing, which it is. It is because it saves a whole lot of cost.
Just think about it, apart from the initial cost of setting up a great Cloud-based VoIP, you spend almost nothing else. You don’t need a incur hardware cost at first and you definitely don’t spend more hardware costs and installation costs whenever you need to add an auto-attendant.
By investing in a great Cloud-based VoIP you can change and update your system in real time, add users and phones instantly without spending a dime extra. Plus you totally avoid long distance or interstate call charges and upgrade your phone systems for free most times.
It may seem to be an additional expense right now, but in the long run, it saves a truckload of money.
3.Create A natural Work Environment
One of the most silent additions to your operating cost is the cost of energy. This is one cost that is absolutely mandatory for every business to run. While, you cannot avoid the cost totally, you can definitely reduce how much you are paying by going a little greener with your workspace.
The first step is often to install fluorescent bulbs in place of your regular bulbs. Also, you need to cut down on your cooling and heating costs and you can do this by working on your natural ventilation and insulation. Check to see if you need wider windows or smaller ones or adjustable ones. Check to see if there is some structural change you need to make to your workspace that will require you spend less on cooling and/or heating.
Try migrating to a paperless office by utilizing emailed bills, online invoices, and subscribing to the digital versions of the papers and magazines you use in the office. These do not just cost less, they are fee sometimes. The less office supplies you need, the more money you get to keep.
Some business cannot survive without the staff being presently in the office, but most can survive with some staff telecommuting at least once a week. Telecommuting has become a big deal in the US already and it might benefit your business financially to hop on the trend.
In 2015, a study showed that the number of US employees who said that they telecommuted for a half a week was about 3.9 million, up from barely 1.8 million in 2005. It is estimated to be about 5 million this year, 2020.
It is not just a trend because of employee rights, it is also genuinely beneficial for employers. When you allow your employees to telecommute at least some of the time, you save money on office supplies like gas, energy and services like Internet, coffee supply and the rest.
The employees are paying for those things themselves at home, but compensated by the fact that they do not need to spend money going to work anyway. It’s a sweet deal for both parties!
5.Encourage Bidding Between Vendors
Most businesses I know have vendors that they rely on to perform certain services for their business. These vendors have a fixed fee that they are okay with and pay repeatedly. Having a reliable vendor is comfortable, but if saving cost is a priority, you may need to let go of that comfort if that is what it comes to.
These vendors are not the only ones that offer their services, infact; chances are that there have been three or four more like them that have sprung up in the five years that you have been doing business with them. These new kids on the block often charge less costs because they are trying to take their share of the market.
With good recommendations, your business may need to migrate to a cheaper equally reliable solution or at least acquire quotes from a few and use it as a tool to drive the cost down from your present supplier. Encourage a bidding war between two, three or more vendors and you will most likely find yourself with a less expensive and reliable service in the end.
Running a small business can often feel like filling a tank with holes in it, some tape may not work, but if only you find the right objects to plug those holes, the tank should work just fine.
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