As business owners, we all lie awake thinking about spreadsheets. Your bottom line, profit margin, and outgoings play over and over in your head. In most cases, it’s easy to see when things are moving in the wrong direction. If this is happening, there are two ways to fix it. First, you can sell more products, and increase your profits. Unfortunately, that means spending more money on marketing, and it takes time. The second option is the quicker and more efficient route: cutting costs.
That’s what we’re focusing on today. By slashing your business costs, you can free yourself of financial worry. At least for a little while. The trick is learning how to cut costs without negatively affecting the company itself. It’s a difficult balance to get right. Follow our advice, and we’ll guide you to better success in 2016. Let’s jump in, and take a look.
The first thing you need to do, is take a long, hard look at your financial situation. Sit down with your accountant, and figure out where all the unnecessary expenses are going. Which investments are working, which are losing money, and where are the leaky holes? By identifying the problems, you can start to find a better route forward. It all starts by facing up to those initial money troubles, and finding a better solution.
Reduce your overheads
One of your biggest expenses or outgoings will be your overheads. These are any essential payments that help keep the business running. We’re talking about office rent payments, energy bills, etc. See if you can negotiate a reduction in rent payments or switch to a cheaper energy supplier. These overheads are eating into your profit margin, so it’s crucial you work to keep them low.
Expenses and travel
There was a golden era for business, when enormous expense accounts were the norm. Nowadays, businesses should be a little more strict about those black cards! In particular, we suggest keeping your company travel costs low. There’s no need to rack up a fortune in flights and travel. In the modern era, you can conduct your meetings over Skype and conference calls. Keep travel expenses to an absolute minimum where possible.
Negotiate your supplies
When it comes to business, there is always a discount to be found! It might not seem like a big amount, but if you shave off a little from each of your supply contracts, it will all add up. The suppliers at CCTY Bearing, for example, are used to negotiating over prices and contracts. Think of other benefits you can offer your suppliers that will help you make that monetary discount.
Payroll cuts are a sensitive topic in business, and we’re not suggesting making cuts to salaries. Far from it. That will only make morale and productivity lower. But, there are some other payroll costs you can reduce. You can put a cap on overtime, reduce expense accounts, and reduce your end-of-year bonuses. Payroll usually makes up the lion’s share of outgoings, so approach it sensibly.
As you can see, there are plenty of ways to make cuts and savings, without harming your company. Each of these little cuts add up to a big change.