In today’s volatile economy, successful cost reduction methods are almost the life and soul of a business. Even a slight dip in revenue, coupled with wasteful outlays and procedures, can threaten a company’s survival.
There is no need to start from scratch or reinvent the wheel. Smarter decisions, cuts and more environmentally friendly business practices can all help save money.
Here are seven ways to cut costs and stay in business during a crisis.
1. Evaluate company expenses and reduce wasteful spending
With profitability and production disrupted and the bottom line in flux, slashing company costs — especially wasteful spending — is a priority during a crisis. To come up with a strategy to cut expenditures, you must assess the company’s current expenses.
Collect any information related to the company’s expenses. You should create both a summary and an itemized breakdown of costs. Once you have all the data, you may examine your spending in-depth, ranking the items from most important (or largest) to least important.
This enables you to discover precisely where the money is leaking and reveal “hidden expenditures” that undoubtedly impact business performance. It’s a simple and efficient method for identifying waste.
2. Get remote workers and freelancers on board
Remote working can keep your business afloat even under testing times. According to Upwork’s report, 22 percent of the U.S. workforce will work remotely by 2025.
Having employees work remotely during a crisis can help operations run efficiently and save money. It’s a straightforward tactic for saving operating expenses.
The cost of running a traditional workplace might be hefty. You can cut the expense of renting office space by letting employees work from home. Additionally, when employees work remotely, businesses can save money on energy, utilities, cleaning and other expenses.
Whether you should hire freelancers or allow employees to work remotely is a matter of your specific industry. Assess your needs and decide whether you can implement this cost-cutting strategy.
3. Outsource services
No company should have to foot the bill for salaries and benefits for departments that aren’t a top priority. Believe it or not, outsourcing can help provide quality services and products at minimal costs.
Outsourcing allows the company to save time and money by enlisting the help of a partner that specializes in serving the company’s particular market. This way, the company won’t require extra renting space or spending on equipment, recruitment, software, employee benefits, training programs, etc.
It is a great way to get better financial outcomes without interfering with internal operations, which is essential for cost control and reduction.
4. Relocate to a more cost-effective place
Rent for storefronts and offices makes up a sizable chunk of operating expenses. Maybe now is the time to stop renting expensive storefronts and start working out of your house or a mobile office.
Consider whether your location and square footage meet your company’s needs. If you decide you really need the office space, you can always try to negotiate a lower rent with your current landlord or choose a smaller place. If a smaller office can accommodate your current needs, that’s the one.
5. Use today’s cutting-edge tools
In the past, it was difficult to quantify the impact of automation on a company’s bottom line. Still, the Industrial Revolution proved that it could dramatically affect efficiency and profitability. With today’s technology, there’s no need to pay as much for a person to accomplish the same work manually. In addition, it will lessen the amount of money spent on materials and other expenses to carry out activities.
Putting money into innovation boosts profits and helps cut expenses.
For instance, staff scheduling software streamlines everyday processes and allows you to set up meetings and shifts in minutes. Using this software, employees and employers can communicate in several ways, such as trading shifts, requesting time off, or leaving a public comment.
6. Prioritize digital marketing
When making a financial plan, advertising costs are usually the first place to get cut. Increased digital marketing channels allow for substituting costlier, less efficient approaches with cheaper, yet more innovative ones.
Switch to the best free advertising forms — such as content marketing, leveraging social media channels, email newsletters — to promote your business instead of traditional marketing.
Also, the results of your digital marketing efforts are easy to track. You can use tools to collect campaign analytics and historical data, and evaluate the success or failure of your various marketing efforts. Then, tweak them to increase efficiency.
7. Embrace automation
Business process automation (BPA) is one of the best ways to improve business efficiency and performance — by leveraging modern digital technologies to perform business processes with the least amount of human intervention. It helps increase efficiency and revenue, and provides an excellent customer experience.
Organizations rely primarily on data to comprehend and fulfill client needs, enhance decision-making, and evaluate marketing initiatives’ return on investment (ROI). Lack of data visibility might result in the accidental disclosure of sensitive information or the failure to comply with applicable laws and standards.
BPA, powered by AI, makes data more discoverable and accessible, which reduces the likelihood of mistakes and keeps operations running smoothly at a lower cost.
Prevent Financial Distress Amid a Crisis
Bringing down your company’s operational costs will not be a one-time thing. It’s a continual cycle that must be reviewed as the business climate changes.
One of the most important things you can do to increase your chances of running a successful business is to learn how to manage your company’s operating budget better. Minor tweaks can make a world of difference in the corporate world.
Managing finances over long-term and short-term periods can be challenging, especially during a crisis. Follow the tips mentioned above to reduce costs and stay in business.
Rob is a content marketing manager at Deputy, a robust scheduling software that can be used to manage your workforce in a wide variety of different industries. Aside from helping businesses reach operational efficiency, he keeps up to date with the latest trends in SaaS, B2B and technology in general.