No business wants to waste money, time, or other valuable resources. Especially during challenging times, you must be on the lookout for ways to reduce business operating expenses in every area or department.
Looking at your business balance sheet and income statements will quickly reveal your revenue and costs, but what are the elements that make up those costs? These are your operating expenses and typically include:
Other operating expenses may not be as significant, but they add up to a considerable cost against your operating income.
Try walking around your office and surveying the business processes in motion. Almost without exception, you will uncover ways to reduce costs quickly.
How many fax machines, printers, and copiers do you have? Chances are, some are not being used efficiently, or you’re making copies of documents that no one uses or needs. What is the paperwork used for? When the task is complete, what happens to it?
You can probably run your business just as efficiently – or more efficiently – with less printing and fewer copies. Having less hardcopies will save money on paper, printers, supplies, maintenance, and electricity.
Do your employees need to be in the office? More than ever, companies of all sizes are leveraging technology to allow work-from-home options for at least some employees. Many businesses find that this amounts to improved morale while maintaining productivity levels.
Communications tools such as Microsoft Teams allow your staff to stay in virtual contact with high-quality audio and video, chat functions, and sharing of documents in real-time. Remote teams offsite can save office space and reduce the need for employee travel expenses. Video conferencing can take the place of costly offsite meetings, saving time and boosting efficiency.
Are you managing your inventory effectively? Excess inventory is costly from several perspectives – taxes, space requirements, and potential waste from spoilage or obsolescence. There are many economical inventory management programs available to help you manage your inventory to save costs in purchasing, storing, and managing inventory levels.
Where feasible, utilize contractors or outside suppliers for tasks like bookkeeping or other office routines – especially where the functions are not customer-facing. Outsourcing can free your employees for handling more meaningful tasks such as supporting customers or following up on sales leads.
IT functions are another potential area where outsourcing may be appropriate for your business. Contracting with hosted internet services to create and manage your website and provide business applications can be a significant saving over building your own IT infrastructure and hiring technical expertise.
Another advantage of contracting for hosted IT services is the use of cloud storage. It minimizes the possibility of lost files or files ending up at unauthorized staff. Saving documents in the cloud makes them secure, while still being accessible to your team from anywhere.
Other functions where you should consider outsourcing:
When your customers need a product or service, odds are the first place they turn is the internet. Ensure your website provides an accurate representation of your business – goods and services, history, and vision.
Like other business functions, website development and maintenance is a prime candidate for outsourcing.
Many individuals and businesses pay monthly bills without scrutinizing their charges. Be sure that you’re not paying for services or benefits that you’re not using. Some may have been useful in the past, with automatic renewal, even though you no longer need them. Cancel any unused services immediately.
Questioning monthly expenditures also applies to professional memberships and dues that you may pay for yourself or employees. Such activities can be valuable for learning and networking with peers and community leaders, but if you’re no longer taking part in meetings or events, cancel them and save the expense.
Recent events in the U.S. have resulted in financial hardships for many companies – particularly small businesses and food services such as restaurants. Most economists agree that this has created at least a short period of recession for the country.
Surviving a recession calls for advanced planning by business owners:
You must take a strategic approach to your efforts at reducing expenses in your office and throughout your business. For example, outsourcing may be attractive and cost-effective for some business functions. Conversely, losing control of critical business activities such as those that deal with customers could harm your ability to generate revenue.
You should also avoid cutting costs that may affect your ability to provide quality products and services to your customers. Reducing inventory levels too drastically, for example, could result in delays in shipping products to customers. The result could be unhappy customers and even lost sales.
Use caution and business sense when targeting areas for cost reduction. Your results could be significant in streamlining business processes, increasing productivity, and improving your bottom line.