In an uncertain business environment, every penny saving can make the difference between profit and loss and the survival or failure of a business. That’s why it is so important to keep an eye on your business costs and reduce them where necessary. We are not talking big changes here, sometimes the smallest of steps and some “common sense” thinking can make a vast difference to your bottom line.
To cut costs you must always know your financial position and have clear visibility into your incomings and outgoings to identify cash flow difficulties sooner rather than later. Keep a handle on customer debt so you know who owes what and when and track your overall position to help you make smarter financial decisions.
Are you renting a premise that is bigger than you need? With a larger office comes higher overheads such as water, energy, and insurance. For example, you may be renting a large office with multiple conference rooms which sit empty 90% of the time, in which case you could consider renting a smaller premise and booking an external conference room on the occasions they are needed. Storage is another common space waster; consider electronic document management options to save wasting costly office space on bulky filing cabinets that are simply not needed.
You will be amazed how much waste your business is generating without you even realising it. According to Gartner, 3% of a company’s annual revenue is spent on paper and printing alone, and that the average worker uses approximately 10,000 sheets of paper a year! Implementing steps to go paperless could dramatically reduce your waste, cut your costs, and improve your environmental footprint at the same time.
Marketing can be costly but with advancements in technology there are much more affordable ways to market your products and services if you have smaller budgets. For example, utilising social media, networking events, and building up a database of customer email addresses to target are all effective ways to reach your audience and create awareness of your business without spending a fortune.
Loyalty doesn’t always buy you savings and sometimes businesses can become stuck with the same suppliers out of ease and forget to look elsewhere. Although a little time consuming, it could benefit you to regularly review your suppliers to ensure you are getting the best deal as it could be cheaper to get your supplies, such as stationary, elsewhere.
A big area you can save costs is by reducing the time spent on tasks which could be automated, thus saving you time which could be spent on human centred activities such as financial planning, decision making and strategizing.
Make sure you are using your staff skill set wisely and allowing them to work in the areas best suited to them, rather than wasting their resource on a role which could be delegated or automated. Not only will this make your business more efficient, but it will also improve employee motivation and retention. You should also remember to review your employee skills before you jump to hire any new recruits, as recruitment is a very expensive process, and you may have the right candidate already on your payroll who could transferred elsewhere in the business.
As we all know, energy costs are set to increase significantly within the coming months so any cost saving you can do in this area will have a big impact on your energy bill. Consider low energy light bulbs, posters reminding employees to turn off the lights when they exit meeting rooms or toilets, and you could even consider adding solar panels to your building.
Reoccurring costs such as subscriptions or licences which are no longer in use are often overlooked but can add up over time. Make time to review your regular costs to see if any can be cancelled or reduced.
Finally, once you have reduced costs where you can, create a budget and then stick to it! This new budget outlining all your incomings and outgoings will become pivotal to helping you continue your cost savings.
In competitive marketplaces and in times of economic uncertainty it is vital to keep a handle on your business costs to ensure they don’t spiral out of control. As we have outlined above, cost saving doesn’t necessarily mean big changes to your business and simply using your space more wisely, reducing paper usage, reviewing your suppliers, and reoccurring costs can all make a big difference to your profits in the long term.
Here at Pegasus our award-winning ERP software, Opera 3, can help in all areas of your business such as cash flow management, paperless payroll, supply chain, document management, and more. For further information about how Opera 3 could help streamline your business please contact us today.
Posted On: August 30, 2022
