Top Ways To Trim Costs And Run A Leaner Business
Roughly 40% of small businesses are profitable while 30% break even and another 30% are losing money continuously. The good news is there are several ways to improve your bottom lines and raise the figure up. One strategy is to reduce your operating costs so that you have a better cash flow. From using technology to decreasing rental, vehicle and supply expenses, smart strategies that cut down unnecessary outlays will increase your profit margins and help your business flourish.
Use Technology to Improve Productivity
Human labor is one of the highest costs of any business, accounting for around 70% of total business costs to pay for wages, benefits, and taxes. But, to identify issues, it is vital to know the trends in labor spending. Are you paying too much money on overtime and are your employees underutilized?
To get an accurate picture, software and technology can help you pinpoint the problems so that you can correct them. For example, Journyx is a time-tracking software that allows you to keep tabs on employee time, expenses, and resources. Date and metrics generated by the software will enable you to see productivity levels and the costs of running the business. You will then know where you can increase overall efficiency and make a positive impact on your cash flows.
It’s not only payrolls that can be improved to upgrade your business. Look at areas which can be automated in your operations. A lot of the parts in a business can be programmed including stock control, inventory management, order processing and marketing. These processes can be improved by using software such as Rentopian. Identifying leads and customer service and engagement can also be automated to save you time and earn more money.
Reduce Rent Costs By Renegotiating Or Find And Alternative Location
Rent is another expense that can affect your bottom lines negatively. It is a fixed cost that you need to pay whether you are making money or not. However, there is still room for improvement when it comes to your rent. If your lease is up for renewal, you might be able to renegotiate for lower rents or avoid price increases if you are a reliable and loyal tenant. Remember, every year roughly 100,000 new leases are settled, but 2 million lease renewals are negotiated. Hence, there is a possibility of improving rental terms in your favor.
Should your lease eat up a considerable chunk of your operating expenses, consider moving to another location to lower your fees. While your current locale might be perfect for your business, it is a good idea to look at alternative and multiple sites. Moreover, if there is no need for your business to run in a commercial location, you can also operate from your home if you have the space. In addition to saving on rent, you can also reduce insurance, utilities, and tax expenses.
Cut Vehicle And Supply Costs
Owning and maintaining a vehicle costs money in fuel and servicing. One way to reduce your expenses is to avoid paying as much money for a vehicle in the first place. Buy a used van, truck, or car in a decent condition. Not only are you going to save big time on monthly car payments, but also on maintenance expenditures. Another option is to look at vehicle leasing options which may turn out cheaper in the long run compared to buying a new ride for the business.
When it comes to office supplies, ensure that you are getting the best prices by constantly monitoring discounts and finding alternative sources. Don’t be embarrassed, too to ask for discounts from suppliers especially if you are a regular customer and pay your bills on time.
Running a business costs valuable time and money. To keep your turnover positive, get a lid on your expenses by using tech to improve productivity, reduce rent, and cut vehicle and supply costs.