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Return on investment. If you’re an entrepreneur, it means everything. However, too many entrepreneurs are only focused on one side of their ledger: the revenues. They work every day to bring in new customers and streams of money. However, that is just part of it. Sure, revenues can theoretically get higher, but cutting costs will also improve your financial situation and improve your profit margins.
When it comes time to cut, the key is knowing what can be slashed and what you should keep. You have to find a good balance between saving money and still operating your company effectively. This will be different for every business, but here are some possible ways that you can cut costs to improve your financial situation.
Have a Plan
You probably had a business plan when you were first starting out. Do you still refer to it? Have you made one since? A business plan isn’t only for a new business, it’s also for an established business that’s looking at change. When you are considering cutting your costs, it’s ideal to craft a plan and take a good look at your business. Forecast your revenues and expenses. Does anything jump out at you as something that’s unnecessary? You might notice you have expenses listed in this plan that weren’t in your original one, and maybe you can live without them. No matter what, getting a good bird’s eye view of your company will give you the perspective you need to consider where you can cut costs.
Evaluate Your Staffing
Payroll is often one of the biggest expenses a company has. Therefore, it has the most potential to save costs. However, since it directly involves your employees, it can be hard to truly examine whether everyone is needed or not. However, that’s part of being the boss. You have to make the hard decisions. Evaluate everyone’s position, and how well they are performing. Are there two jobs that could be merged into one? Is someone spending too much time doing unnecessary things that don’t help the business in a meaningful way? You may also have staff in positions that don’t properly leverage their talents. Getting everyone into the right position and maximizing your team may be the best thing you can do to save money. It will help with productivity too.
Automate
Automation is the way of the future, and there are probably ways that you can automate your business to be more efficient. This doesn’t mean you have robots doing production line work. It means using a software solution to handle certain tasks that don’t advance your business. For example, your accounts receivables can be completely automated and synched with your accounting software. Invoices are sent out, reminders are emailed, and checks are quickly scanned, making the process smooth and simple. When you are automating tasks, there is less chance of an error, and your office can be more efficient.
Marketing
There are many ways that you can market your business more affordably. For one, social media is a powerful free tool you can use to connect with your audience and customers. If you want, you can produce highly targeted ads that will cater to people who are already predisposed to purchasing your product. However, the key is to engage with your customers. Reply to their comments and respond if they have a concern. Social media allows you to display your brand’s personality and build relationships with your customers.
SMS marketing is another way that you can affordably connect with your customers. It provides a low-cost method of reaching them with a platform that they use every day. If you use an SMS gateway solution, you can quickly and easily compose messages and build mailing lists right from your computer. It’s fast and effective, and most importantly, it’s cheap.
Check Your Contracts
When it comes to your fixed costs, it’s easy to get complacent. It’s the same number in your budget every month, quarter or year, and you don’t have to think too much about it. However, your suppliers and vendors also get complacent. They don’t have to do anything to keep your business. Evaluate your contracts every time they come up for renewal. It could be that you’ve been paying for services you haven’t used or don’t need. Look around at other vendors and service providers and you might find a better price. You can also try to get that lower price from your current provider. The key is to be diligent and proactive.
One of the best places to do this is with your insurance. Things change over time, and you may be paying for coverage that you no longer need. You can also shop to different providers who will be more than happy to take your business. There are a lot of options out there, so look around.
Office Supplies
Office supplies can add up when it comes to buying pens, paper, binders, file folders, and anything else you might need. However, making small changes could be enough to make a dent on your spreadsheet. There’s no need to buy the best possible paper if you’re only using it within your office. Some workplaces tend to buy high quality pens when they can buy lower quality ones that still work more affordably in bulk.
Track supply usage in your office. There may be several areas you can cut. Also, you may be using paper when you don’t really have to. Document sharing and editing via the cloud is not only more efficient, but it’s cheaper, too. On a related note, are you paying for a fax line that you haven’t used in years? If so, it’s time to cancel it.
Better For The Bottom Line
There are plenty of ways to lower your costs and improve your financial situation. By making some small changes, you can put more money in your pocket and invest back in your business.
