If you want to increase the profitability of your business, the general rule of thumb is that you have to increase your revenue and control your costs. It can be quite tempting to increase your costs as your business grows. However, this can hamper your cash flow, as your money will be diverted into other things. This will mean that you won’t have any cash to use whenever the need arises. To prevent this from happening, you have to cut down on your non-strategic costs. This will help you carry on your business efficiently, while ensuring that you do not run at a loss. Here are some of the top 5 areas where you can look into cutting costs.
1. Outsource tasks
If you have some tasks that need to be handled from time to time but you cannot afford to hire a full time employee, consider outsourcing the tasks to someone else. You can hire virtual assistants to perform a wide range of tasks. From accounting to graphic design, writing, sales and marketing, serve as receptionists and offer web design and management service. You don’t have to hire offshore, you can hire someone locally to complete your projects. You can hire someone for one time collaboration or you can hire them on a part time basis. This means that you only pay for the hours worked, instead of paying a full time worker.
2. Hold online meetings
Sharing business information and strategies among employees helps to inspire staff, build the team spirit and improve communication. One of the ways this can be done is by holding team meetings once in a while. In order to save on time and travel costs, consider holding online meetings instead of having employees physically converge at a specific venue. You can easily organize an online meeting through a conference calling service. This will enable all employees to join the meeting wherever in the world they are. They can do this using their smartphones or a computer.
Something exciting you could use is the ability to create immediate audio conferencing bridge directly using /qconf at slack. Given that call conferencing companies do not charge a lot, you can hold as many online meetings as you want in a month without having to pay a lot for these services.
3. Improve your document management
Businesses often utilize a lot of documents and if you are not careful, you may end up with tones of paper, which will leave you with little or no storage room in your business. To prevent this from happening, consider digitizing your documents instead of using paper. Digitizing documents not only make them easier to store, it also makes it easier to find to search and information. This will save you the cost of having to buy paper rims, printers, toners and cartridges for your printer, plus having to find storage space for documents.
You can store your documents in the cloud. This will make it easier for all your employees anywhere in the world to access the documents whenever they need them. This will save you the cost of having to scan, verify and physically mail out documents when they are required.
4. Negotiate better rates
If you need to hire professional services, let’s say hire legal counsel, you do not have to pay high corporate rates. Most specialists will charge you an hourly rate for their services. However, you can evade this by putting these companies on a retainer. That way, whenever you need their services, they can serve you without charging you exploitative rates. This will work out well if you are likely to utilize the services of the company on a frequent basis. Also, make sure to negotiate the fees to something that you can afford. Most professionals are flexible, so they will not mind giving you a discount if you are going to be a long term customer.
5. Calculate your return on investment on advertising
Marketing is one of the highest costs for any business. Therefore, it is best to ensure that you are getting a good return on investment when you are calculating your marketing costs. Scrutinize your advertisements and check which ones are working and which ones are not. Eliminate any methods that are not working. You can also find alternative ways that are much cheaper than the methods that you are currently using. For instance, advertising online can be much cheaper than advertising on radio or television.
Cutting costs is one of the quickest ways to increase the profitability of your business, by helping you to save money. This will enable you to last longer in the market, while still maintaining your competitive edge. These tips can work for any type of business, whether you are an established business and have been in the market for a while or whether you are a new entrepreneur.