The total cost of business ownership can be staggering, and those costs tend to increase over time. To help improve your bottom line, you need to control your business expenses.
An increase in revenue or a decrease in expenditure—no matter how small—can make a world of difference in the profitability of your company.
The good news is that creating processes that will help reduce the cost of running your startup venture doesn’t have to eat up a lot of your time and effort or even result in hardship for you and your employees.
It’s just a matter of making smarter decisions when it comes to allocating your limited business funds.
Here are some of the ways to cut your ownership costs and keep profits up without backing your business into a tight corner or compromising on performance and the quality of your offerings.
1. Use cloud-based solutions and other cost-saving technology
The business landscape is rapidly changing. Harnessing technology to keep up with the latest advancements will lead to improved efficiency and a significant reduction in operational costs.
Instead of investing a lot of money in building and maintaining your own IT infrastructure, you can take the cloud computing route.
By using cloud-based software services, you’ll reduce or even eliminate the costs of onsite server maintenance. There’ll be no need to hire IT staff to install and update your software or file servers, and run backups.
A cloud provider will manage the server-side for you, as well as regularly conduct updates and ensure data security and stability in case of disaster.
A cloud provider also gives you the advantage to scale the bandwidth up and down, depending on your current business needs.
Furthermore, your data is accessible across devices, at any time or place.
By moving your operations to the cloud, you can enjoy huge savings on hardware space, employee salaries/benefits, and other IT-related expenses.
The monthly fee to keep your systems up and running will most likely cost you a fraction of what you were previously spending on your IT infrastructure.
Other digital or automated solutions that can help you perform your business functions at a small price compared to the cost of using human resources include:
- Google Hangouts, Zoom, MeetingBurner, and Microsoft Office for virtual meetings and teleconferences.
- Accounting, invoicing, and bill payment software.
- Cell phones, VoIP, and virtual phone lines in place of traditional landlines.
2. Outsource operations instead of hiring in-house staff
Another way to cut back on overhead costs is to hire contract workers or freelancers instead of in-house employees. This allows you to keep your organization slim and trim—saving on taxes and other staff-related expenses at the same time.
From content writers to marketing specialists, website developers, graphic designers, customer support, and copywriters, you can hire all sorts of professionals on a need basis to get the job done without making immense monetary commitments.
Having a flexible team working on a per-task/project basis will help reduce your business costs and improve overall key performance indicators.
It’ll also grant you the opportunity to focus on the more important tasks and delegate other aspects of your business to virtual assistants/staff.
You can find skilled professionals that can help tackle various tasks efficiently for your organization on platforms like Upwork, PeoplePerHour, Freelancer, Odesk, and Fiverr.
3. Audit your current assets and make the most of them
It is important that you take stock of your assets and inventory. Knowing what you have can help you use your resources efficiently and identify the tools and expenditures that aren’t providing value to your business.
Take a look at how many paid apps, software, and subscriptions you have. How many of them are you making use of?
If you haven’t used a certain asset or technology in over three months, you probably don’t need it. It’s time to stop paying for it or consider selling it off.
If your business involves a lot of various tools, parts, or other equipment, it can be challenging to keep every single piece in mind. Knowing what assets you have and where they are will help you make better cost-effective decisions for your business.
You’ll be more equipped to maintain your assets and easily detect when something has been stolen or gone missing.
Let’s say your company printer breaks down. You’ll have to figure out if it makes sense to fix it or just buy a new one by considering how long it’s been used, the cost of repairs, and how well it might perform after being repaired.
This is where asset management comes in. It helps you prioritize decisions using factual data to ensure that you get the maximum returns on your investments.
You can minimize business costs in the short and long term by constantly auditing your assets and properly allocating them.
4. Minimize office space
Take a good look at your current office space. Is it the right size for your operations, or can your staff function just as efficiently in a smaller, more affordable space?
Perhaps your organization can benefit from relocation to a similarly sized office space in a less expensive building or neighborhood or exploring a co-working arrangement.
Think about ways to consolidate the functions of different spaces in your office. A room can serve multiple purposes. For instance, your conference room can double as a break room or storage room.
Depending on the kind of business you operate, running operations from a commercial premise may not even be necessary.
Consider going mobile or switching to telecommuting. If most of your team can work remotely and don’t have an ongoing need to gather in one place, paying a huge amount to rent an office space makes very little sense.
You can hold your business meetings anywhere: coffee shop, conference hall, or co-working space.
The costs that come with having a physical place for your business can be enormous. However, setting up a virtual office space will only cost a small fraction of that amount.
This will help you save on office space and also reduce how much you spend on insurance, business taxes, and utilities.
Reducing the costs of running your business is a proven way to improve your margins. And you can only do it effectively when you identify the areas where it makes sense to cut costs.
The last thing you want is to take any risks that might harm your company.
By tailoring the approaches above to suit your business, you can cut business costs and improve profitability without endangering the performance of your organization.