8 out of 10 small businesses are known to close within the first 18 months of starting up. Most business professionals focus on increasing their profits by increasing sales, but lowering your business expenses can be just as important when you want to become profitable. Below are some simple ways you can cut costs and increase profitability in your small business.
You should consider installing a smart thermostat into your business. Although it is possible to compare business energy prices and get some great deals, smart thermostats will also help reduce costs. Programmable smart thermostats can cut your climate control costs without compromising on comfort. By using a programmable thermostat, you will be able to control when your heating comes on and when it goes off, so if you’re in the office from 9-5, you could programme your thermostat to come on at 8 and go off at 4, saving you money overnight. To complement this, you could reduce your lighting systems and climate control workloads by:
- Replacing old seals around windows and doors to reduce heat loss.
- Installing double pane windows because they are better insulators.
- Installing a solar water heater to reduce costs of energy in the long term.
Another way to reduce your utilities and overhead bills is to ensure that you turn off or turn down any non-essential appliances, lights and machinery when not in use.
Reduce Paper Use
You may think that using reams and reams of paper doesn’t cost too much money, but you would be wrong. Like reducing your water and energy usage, cutting paper waste is both good for the environment and your company’s bottom line. Here are some ways you can do this:
- Use secured electronic file exchange services instead of printing out letters or documents and sending them through the post.
- Print on both sides of the paper instead of only one.
- Reuse waste paper as scrap paper or note paper.
- Where possible, take your name off direct mailing lists.
- Shrink fonts on the documents you need to print, to help tighten margins.
Telecommuting can have an enormous cost-cutting effect on your business. Many studies have shown that telecommuting and other forms of flexible working have positive implications for employee job satisfaction and morale, both of which correlate with productivity. Telecommuting can also help reduce costs by:
- Reducing travel and commuting costs.
- Reducing the time lost to commuting.
- Reducing water and electricity usage in the workplace.
- Reducing the amount of work space required as you won’t need an office to house your employees.
If your business cannot offer its employees the opportunity to work from home, then you could think about reducing the office/work space you need by using the space you have more efficiently. Examples of how to use your space more efficiently could be by introducing multi-collaborative workstations or making rooms multipurpose (a conference room could also work as a break room).
Reduce Supply Costs
Supply costs are not fixed. It’s easy to believe that they are fixed when centred around a single supplier. However, that’s not the case. Companies simply do that out of simplicity rather than cost efficiency.
Whether the business has an office with supplies that need replenishing every few weeks or there’s a warehouse with different kinds of required purchases, it’s quite possible that there’s efficiencies to still be rung out of the current expenses.
Don’t be afraid to negotiate and ask for a discount. The worst a supplier will do is decline the request stating their own costs as a reason for not offering more competitive pricing. It never hurts to shop around and see what savings can be achieved.
Overhaul Marketing Efforts
For small businesses that have been operating for many years, the marketing plan is likely a little behind the times. Billboard advertising and full colour glossy adverts in magazines are pricey with better alternatives available now.
Using digital marketing, it’s possible to get the brand and products/services in front of a suitable demographic of likely buyers. Whether these are businesses or consumers who may make a purchase, using online technologies from advertising networks allows small businesses to reach customers far more easily and cheaply too. Additionally, by using retargeting, it’s possible to promote to Facebook users who have recently visited your business site and may be willing to return to complete their purchase.
All businesses are different. For example, you can’t cut travel costs if your work doesn’t involve travelling, and you can’t reduce your office or work space if there is no option for you and your employees to work from home. However, by looking through your business accounts, it is possible to find somewhere that you can reduce costs.