Cost Cutting Efforts for 2021
There are two ways for a business to stay out of the red. One is to do everything it can to increase sales. The other is to reduce costs.
All business owners want to make money, but sometimes they are doing it the wrong way. For one, they are spending too much money, and often unnecessarily. A Business Insider report says 82% of businesses shutter due to cash flow problems.
Let’s face it, 2021 will still be a very challenging year for everyone. It will probably take a couple more years before the situation gets back to pre-pandemic levels. That is why experts believe that increasing sales levels will be extremely difficult this year.
To stay afloat, many businesses will have to take another strategy – reducing costs. To do that, they should identify the necessities as well as the dispensable. There is plenty of work ahead, and cutting costs is just one of the several steps your business should take. But, you will have to start somewhere.
This article aims to provide you with some tips on how to cut your expenses and operate more efficiently.
Go digital
Paper may be cheap, especially if you buy in bulk. However, employees tend to use more than they should, and the costs all add up. Reduce recurring business costs by going paperless. That way, you can avoid waste.
You can invest in a digital invoice and bill payment system. Transfer all your paper files to your computer. Aside from the savings, you also become more eco-friendly and often more efficient by going digital.
Cut the cord on landlines
If you are still using a landline, then it’s time to get rid of it. It has long become an unnecessary business expense because there are many cheaper alternatives right now, like VoIP, cellphones, and virtual phone lines. These technologies are cheaper and can do a better job than an old landline could.
Manage your time better
If you are one who believes that time is gold, then time management will help you get rich. Work without distractions to be more productive. These days, you can use apps to help you focus on your tasks on hand, like Todoist, Rescue Time, and Focus Booster. You can also make use of apps that can track the working hours of employees, like Toggl and Connecteam.
Also, avoid meetings when the topics can be discussed through email. If meetings cannot be avoided, stick to the allotted time and focus only on the predetermined agenda.
Location, location, location
You may have heard this mantra several times already, but we cannot stress enough the importance of a good location that you can maximize for your operations. It should be near businesses whose services you will probably need. Your space should also be able to accommodate the different functions of your company. Many businesses are relocating from city centers to the suburbs to cut costs, downsizing, or doing away with physical offices altogether.
However, if your business does not need a physical location, then you do not have to spend funds on one. You and your team can work remotely, reconvening only when needed
Utilize digital marketing
While traditional marketing still works to some degree, digital marketing is cheaper and more efficient because your campaign is more targeted.
Take advantage of what social media platforms like Facebook, LinkedIn, Instagram, Pinterest, and Twitter have to offer. You can focus on users who belong to your ideal customer profile, ensuring that your message does not go to waste.
You also cannot overlook the value of email marketing. It is all about capturing leads so that you can send messages to people who are looking for your products and services. Email marketing is one of the most cost-effective ways to communicate directly with your customers.
And of course, there is search engine marketing. Make use of pay-per-click advertising, where you only pay when a user clicks on your link.
These methods are tried and tested, but you will have to test your campaigns to find out which techniques work best for you
Outsource some of your tasks
There are instances where you can save more outsourcing specialized tasks instead of maintaining an in-house team. For example, outsourcing IT management will save you a lot of time and money instead of hiring, training, and maintaining an in-house IT team. They come in ready to work from day one.
Outsourcing companies also make sure their professionals are trained and updated about the latest technologies, which you do not have to shoulder.
Create a working budget
A budget will be your guide to minimizing expenses. You can make smart decisions with your finances because you have a clear idea of how much money you will be spending each month. Focus on financial management to avoid common missteps.
A working budget is one in which you make adjustments each time you see fit, then you follow it. It will help you cut business expenses in real-time.
Analyze your financial expenditures
You can further reduce your costs by assessing your financial accounts and insurance policies. Try comparing insurance providers. Ask your current provider to match the lowest rate and consider switching if they cannot match it. Take a closer look at your insurance policies as well, making sure that you are not having duplicate coverage or being over-insured.
If you use a business credit card, pay off your debt in full each month and do not allow it to add up. That way, you are just borrowing money without interest.
Buy used equipment
The equipment you buy depreciates the moment you take them out of the warehouse. Plus, brand new equipment is expensive.
When purchasing furniture, ask yourself if you need a new office table or chair. The furniture you can buy in a garage sale will work just as well.
Shop locally
Use products and services provided by the little local businesses near you. Not only will you be getting better deals, but you can also get customized services to fit your needs. You also help the local economy when you buy from local stores, so everyone in your area wins.
Conclusion
Whether you have a big business or a startup, cutting costs should be on top of your to-do list this year. These money-saving tips will help tide you over until things become brighter in the economy.