10 Tips for Lowering Your Business Costs


Running a successful business is not easy. The bottom line for a business to succeed is to generate more revenue than it spends. Generating revenue is obviously a key focus but reducing costs can also help. Here are 10 tips for lowering your business costs:

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How profitable a business is and how much the profits grow over time is a measure of success that is widely accepted. There are many things that go into how much profit a business makes. A lot of time, effort and money will be spent on trying to maximize revenues, but smart businesses also spend time and resources on finding ways to cut the costs.

The results of boosting revenues and cutting costs are the same: the profits go up. The key to cutting costs is to find new ways to do things that are better and most importantly, less expensive.

The Impact of Lowering Costs

It may sound like a simple idea. Spend less and increase profit, but doing so can also be dangerous. If the costs of the operations are cut in the wrong way, it can impact the revenue of a business. It could cause a business to become less productive.

Lower costs can also impact your employees. They may become less productive or worse, the best employees may leave. In the end, cutting costs may not increase the bottom line if it has a negative effect on the business. So it's definitely worth being mindful of what you are cutting to make sure it's the right thing. 

Recommended reading: 5 Ways Your Small Business Can Save Money

10 Ways To Cut Operational Costs

Here are 10 different ways to cut operational costs:

1. Look at how and where you hire employees 

The largest expense for many businesses is their employees. Businesses can find ways to lower the cost of finding, recruiting, hiring and training employees. Hiring people to work remotely (also referred to as "cloud sourcing" because employees can work from remote locations using the cloud) can be a way of finding good employees at a lower cost.

Hiring interns and temporary employees to meet specific business needs is another way to cut the cost of hiring and maintain permanent staff when you don't need them all the time.

2. Go virtual

One of the ways to lower costs is to using virtual assistants. Instead of paying an employee to work as a receptionist or assistant, the virtual world of the internet offers a solution. A virtual assistant is always on duty and never needs a holiday. They also cost less than having a real employee. Customers still get the benefits of talking and relating to a real person, but the business does not have to bear this large expense.

3. Turn to the Cloud 

The cost of the infrastructure for computer systems can be a burden. IT professionals and the need to always upgrade the software can also cause problems and cost for a business. Instead of creating an in house computer system, businesses can benefit from cloud computing. Cloud phone systems, cloud storage and other cloud functions are easy to expand and contract and do not require a large investment to create or maintain. 

4. Getting rid of offices 

For a long time a business had a place they called home. The expenses of offices can be a drain and are not always needed in the modern world. Cloud computing can allow employees to meet over the internet, they can allow for information, documents and work to be shared and they can eliminate the need to travel to meet with other employees or clients. It can also help a business to expand into new markets. Like the virtual assistant, a virtual office can allow a business to grow while keeping the fixed costs of the business down.

Recommended reading: 4 Simple Ways to Save Money in Your Business

5. Reconsider bulk buying 

Discounts are often offered when buying in bulk, but they could end up costing a business more money. If buying in bulk requires storing excess things, the cost of storage can add up quickly. It goes against the idea of eliminating fixed expenses.

6. Work with other business 

One way to buy in bulk that can work, is to do it with other businesses. A small business may not have that much purchasing power, but several small businesses can buy in bulk without buying more than they need. Pooling the resources of businesses is not a new idea, but thanks to the cloud, it is easier than ever before.

7. Pay bills on time 

Many businesses are late on payments because they are not up to date on all of their accounting and then end up incurring extra fees. Cloud accounting can help a business stay aware of all of the bills and the money they need to pay them.

8. Go Green 

Getting rid of paper and going green can save a lot of money. From billing to paying bills, to sharing of documents with employees, the cloud makes it easy for a business to eliminate the need for much of the paper they use.

9. Track time

Every minute that an employee is getting paid and they are not working efficiently or on the right things is costing the business money. Look for technology that helps with productivity and that properly tracks the time that an employee spends on their work.

10. Monitoring

The last step is to monitor how a business is spending money. The more that a business is aware of where their money is going, the easier it is to find places that it can be cut.

Saving money is never easy whether it is for an individual, a business or the government. It implies that something will have to be sacrificed. When the right tools and methods are used, nothing has to be sacrificed for a business that wants to cut operational costs.

If you have any thoughts, ideas or suggestions about how a business can save money on operating costs, please share them with us in the comments below. 

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Tuesday, 19 November 2019
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