3 Manageable Ways to Cut Business Costs
The surest way to increase business profit in the long run is to reduce business costs. While the logic behind this idea is easy enough to understand, the process of cost reduction isn’t as straightforward. Perhaps this is why many entrepreneurs don’t know how to control expenses in a company. In fact, a study by Wasp Barcode Tech revealed that only 14% of entrepreneurs are confident about their knowledge on business finance.
Learning to Navigate the Tricky Business of Cost-Cutting
When you search for tips on how to reduce operating expenses in business, you’ll find that most cost saving strategies are drastic or complicated. This is probably because these sources contain cost cutting ideas for large companies, rather than small businesses.
Apart from being hard to follow, these tactics can have negative repercussions for your business. The good news is that strategies on how to cut costs don’t have to be too elaborate. In fact, the more straightforward and convenient your approach is, the easier it is to stay committed.
Here are 3 manageable ways to cut business costs:
1. Arrange work-from-home schedules.
According to Global Workplace Analytics, 50% of the workforce consists of jobs that can be done at home and up to 90% of employees want the option to do so. The same study revealed that only 25% enjoy this arrangement.
Remember that office real estate takes a huge chunk of one’s business expenses. Whether you rent or own your working space, you also need to account for utilities, furniture, and supplies. Think about how big of a difference it would make if your team has work-from-home days!
Apart from the savings you can make in office space expenses and utilities, you can also expect higher productivity among employees when you let them work remotely. When telecommuting is an option, employee morale and job satisfaction increase among workers.
2. Take better care of current customers.
Many entrepreneurs concentrate their marketing efforts on new customers. However, campaigns towards new customers can be costly. Remember, you are promoting your product or service to an audience that probably don’t know you yet. If you want to save costs, funnel a good portion of your marketing funds towards existing customers instead.
A study by Annex Cloud revealed that long-time customers are highly likely to spend more and recommend a brand to others. So, rather than cooking up gimmicks to attract new people, concentrate on how to make your current shoppers happier. Prioritize them for freebies and discounts and offer exclusive perks to high spenders.
3. Outsource specialized and non-core tasks.
Hiring more people as your business grows is inevitable. However, paying for substandard work output or non-core staff shouldn’t be.
Outsource admin chores and specialized tasks such as marketing and bookkeeping. When you do, you still get the job done without having to spend as much time and money as you would in traditional employment.
Virtual staffing is also the most feasible way to expand your team without having to expand your office space or blow up your utility bills. As a business owner, especially for small business owners, it’s a good idea to outsource tasks to a virtual staff because it’s an easy and effective answer to the question of how to reduce expenses in office.
Just like other aspects of running a business, cost reduction must be done with patience, commitment, and skill. To take care of the latter, follow these 3 manageable ways to cut business costs.