Whether your business is a brand new venture or you’ve been up and running for years already, you’re likely on the lookout to reduce your business’s operating costs as much as possible.
A common fear is that large-scale, dramatic change is necessary to really put a dent in your operating costs.
Fortunately, there’s a lot you can do to save money and lower your regular monthly expenses that won’t have a jarring impact on your operations.
Streamlining your current processes, and even replacing some of them or introducing new ways of working—it’s an approach that doesn’t have to feel like turning off one switch and switching on another. Making smaller, progressive changes is actually more likely to work—and you’re more likely to stick with changes in the long term if you roll them out incrementally.
Here are a few cost-cutting areas to start.
1. Lower your energy bills and consumption
Energy isn’t cheap, that much is clear—but it’s a necessary expenditure when you’re running a business, and impossible to cut out completely. Whether you’re running one small office or an entire warehouse, you will no doubt have lighting, equipment, and appliances to power.
Fortunately, it is more than possible to reduce the amount of money your business might spend each month on gas and electricity. In fact, it’s actually pretty easy.
It’s possible that your business isn’t currently getting the best possible rate. Start with getting in touch with either your current energy company or an energy switching service to find out if you really are getting the best deal. Another possible cost-cutting measure for some businesses might be to adjust your schedule so that you’re using less electricity during peak hours.
Also, consider your overall energy efficiency. Replacing your old fluorescent or even incandescent bulbs for LEDs, and upgrading to more energy-efficient equipment and appliances (which offer the same level of performance) are just two of the simple ways you can save your company from spending hundreds of what would otherwise be profitable dollars on unnecessarily high energy bills.
You might find that you have to spend money to save money by improving energy efficiency. Putting together a simple forecast that shows what you spend on utilities each month and how much you project you can save through upgrades will help you see how long it will take you to start realizing cost savings.
2. Review your insurance policy
Reviewing your business insurance package or policies that your business has in place could potentially save yourself hundreds of dollars each year—or even each month, depending on your needs.
It’s entirely possible that you opted for a policy or package which, by default, includes coverage for certain incidences that don’t necessarily apply to your industry or particular business. You might even find that you’re paying out for an entire policy that you don’t need.
Take the time to talk to an expert business insurance broker. Explain your business’s particular circumstances and identify the coverage your company actually needs, and then have a bespoke package created which reflects this. This means that you then only pay for the insurance you need, and none of the coverage you don’t, which could considerably shave down your monthly insurance bills. Don’t skimp on coverage so much that you open yourself up to unnecessary risk and liability—just don’t pay for coverages that your business doesn’t need.
3. Refine your recruiting and HR processes
It’s no secret that people are the largest expense for many companies. Hiring, recruiting, and retaining your staff is a big investment, not to mention ancillary costs like managing payroll and listing your position on third-party job boards.
There are a few different ways to control costs in this area. A huge time-saver can be outsourcing repetitive, cumbersome tasks like managing payroll to a company that specializes in that work. At the very least, getting out of Excel spreadsheets and using an app-based tool can help you create better record-keeping systems, and can remove some of the risks of human error—not to mention the time you can save automating repetitive tasks.
Every business is unique, and at some point in your business’s growth, you might find that you save money by bringing all your HR functions in-house. As you calculate possible scenarios, be sure to include the time you or your team are spending handling the repetitive tasks and the salary costs associated with that time. And don’t forget to factor in the infrastructure costs of hiring someone full time, including benefits. You might find that hiring for an HR “generalist” role is a good first step, so you have someone on your team helping with recruiting and compliance, as well as things like payroll.
Finally, when it’s time to post a new position, think carefully about the costs associated with advertising a new position. You might find you can save money that you’d otherwise spend on mega-job posting sites if you spend a little time finding (potentially smaller) job boards that are geared toward exactly the type of candidate you’re looking for. For example, if you’re looking to fill a marketing role, looking for job boards associated with marketing associations or societies might be a more fruitful avenue than blasting the posting on a site like Monster or Indeed.
4. Invest in your online presence through digital marketing
Advertising your business is a significant area of expenditure. After all, if people don’t know about your business, how can they purchase a product or service from you?
The trouble is, marketing can seem like it is perhaps too expensive at times. But, as with virtually anything in the business world, there are ways that you can make this process much less costly without compromising effectiveness—namely, by putting the majority of your efforts into online marketing.
Whether you outsource your online marketing services to an agency, take a more hands-on approach and do it yourself, or start building your own in-house marketing team, there are many efficient and cost-effective methods for you to put your brand on the map and engage with customers.
Starting with your website, compare costs for hosting and for services like offering an online store within your site. Pay attention to your site’s metrics: your number of visitors, referrals (or where your visitors are coming from), and your conversion rate—the folks who make a purchase while on your site. If you’re not sure where to get that information, start with Google Analytics.
From there, look at the structure of your website itself, and how visitors make their way through it. This article on optimizing your site (for Strategic Advisors, but the advice is spot on for every business with a website) is a great guide to getting started.
The best thing you can do to save money on digital marketing is to first make sure your efforts are geared toward your target market. First, who is your target market? If your answer is “everyone,” go back to the drawing board. You can waste a lot of money and effort if you’re not sure who your ideal customer is. Putting together a buyer persona will help you focus in on the specific types of messaging and advertising that will appeal to the right people.
From there, focus on your web metrics. Before you spend money on a marketing campaign, outline your key performance indicators: the metrics you want to affect. Maybe it’s visitors to your site. Maybe it’s the number of people who make a purchase. Maybe it’s increasing conversions or even repeat customers. If you do outsource work to a marketing agency, or decide to invest in an internal marketing role, plot out costs versus benefits before you sign on the dotted line.
When you’re looking to trim items from your marketing budget, start with the ones that don’t contribute to your primary business goals. If your investment in Facebook advertising has resulted in 20,000 new followers but can’t be attributed to any new business, pay attention to that discrepancy. Maybe it’s time to refocus the campaign, or maybe you’d get a better return on investment from putting those marketing dollars elsewhere.
The key to saving money on costs is reviewing them regularly. Think about setting up a monthly or quarterly budget review meeting as part of your regular business plan review. You might even incorporate a SWOT analysis into your review once or twice a year. New insights and changes in strategic direction will undoubtedly have an impact on where you’re spending money and how much.