Every business has its ups and downs. As you grow, you’ll earn more revenue — but as one of the universe’s crueler rules, your expenses will also increase. You need to hire more people, buy more equipment, advertise to new markets, and so on.
Unfortunately, if you’re seeing a rise in expenses — or worse, a drop in revenue — selling more is easier said than done. To boost your profits, you’ll need to trim the fat by reducing business costs.
This doesn’t necessarily require you to cut any of your activities. Sometimes, shifting your resources or using new virtual tools is all you need. Here are some ideas to get you started.
Outsource low-skill tasks
Diary management, email processing, and taking phone calls are tedious yet crucial tasks. While physical office assistants are a time-honored resource, if you need to handle a larger volume of tasks without skyrocketing your costs, consider a virtual assistant!
These tend to be more cost-effective because they:
- Specialize in these tasks and can hit the ground running with minimal training
- Work only the hours you need, so you’re not paying for lunch breaks or downtime
- Handle their own equipment and workspace, so no need to allocate valuable desk space or equipment.
Virtual assistants can do anything a physical assistant can do, including organizing meetings, research, basic customer service, and even posting on social media if you don’t have a marketing team.
You can find high quality VAs by using dedicated agencies, or posting ads on freelancing platforms like Upwork and Fiverr. This is an easy method of reducing your business costs, because you don’t need to pay employment taxes, insurance contributions or other costs that come with full-time salaried employees.
Review your software costs
Software fees can eat up your budget before you know it! Remember, the most expensive software isn’t always the best. And if you’re not gaining value or saving time with a particular program, let it go.
For example, many businesses believe they have to use Office365… because doesn’t everyone? Nope!
Office365 subscriptions are pricey, and if all you need is straightforward documents, spreadsheets and presentations, consider using free tools like Google Docs, Google Sheets and so on. They even have a business offering similar to Office 365, called Google Workspace (formerly G Suite).
Take a look at your accounting, HR, and project management software as well. Do you really need all the bells and whistles? There are new programs coming down the pipeline every year. Shop for some cloud-based accounting, task management, and even payroll software that costs much less.
And of course, don’t forget your website. Hosting alone costs a pretty penny. Check to see if your plan meets your needs — reduce business costs by cutting extra storage or bandwidth you don’t use. Also, check your site for any paid plugins or themes that you don’t really need. It’s time for a spring cleaning! (Or whatever season you’re in.)
Review your marketing costs
The best advertising is word-of-mouth, which is basically free. But as that’s hard to get, most businesses run some sort of paid marketing. The question is, are you actually generating revenue from those campaigns?
Misaligned ad campaigns are one of the biggest drains on your budget. Are those billboards or direct mailers really bringing in customers? Do your PPC ads get clicked on?
Dig into your analytics or call in an expert to make sure you’re not overspending and you’re targeting the right people on the right channel. You may find that some types of ads have a better ROI than others, e.g. sponsored content on Instagram rather than digital ads, or Google ads rather than PPC.
Implement revenue operations
Revenue Operations is a new framework for centralizing customer support and building complementary systems. It’s also sometimes referred to as RevOps.
This not only helps you avoid lost opportunities and keep customers happy, but also reduces business costs by trimming your day-to-day operating expenses. In a nutshell, all your customer-facing departments (sales, marketing, support, etc.) are brought together. Together, they focus on providing good customer service, upselling products, and sharing data to boost their efficiency — and therefore your profits.
Ask your accountant (or get one)
Accountants aren’t just the person you see during tax time. They’re your secret weapon for a streamlined budget. That’s because they know where, when, and how to save money. Ask your accountant. They might be able to come up with creative — yet perfectly legal — methods of reducing business costs. Plus, they often know of some nifty tax breaks you can claim.
Do more online meetings
Ever thought to yourself, “This meeting could’ve been an email”?
Meetings in general are huge drains on time. And if your team is spread out geographically, meetings are a drain on fuel and money as well. The solution is twofold:
- Hold fewer meetings
- Make your meetings virtual whenever possible.
Many of us learned to do this during lockdown, and decision makers can see how effectively it reduces business costs without sacrificing productivity. Video conferencing tools like Zoom, Google Meet and Microsoft Teams give you the benefit of face-to-face communication, without the cost of traveling to meet in-person.
Consider remote working
Similar to the above, of the biggest single costs for a company is their office space. If you’re especially eager to reduce business costs, consider decentralizing your operations and create a virtual workspace.
Remote work is all the rage nowadays, and people are more comfortable with it thanks to COVID. Some people have realized that a physical office isn’t worth the huge overhead. Is most of your team working remotely anyway? Do they really need a dedicated desk and a 1 hour commute each way to do their job effectively?
If you do need an office, look at co-working spaces such as WeWork, where your team essentially rents office space when needed. This is ideal for teams with varied schedules or a lot of part-time staff. You can also go part-remote, part-office (now ommonly referred to as ‘hybrid working’) to cut down your overall space required, as well as heating, cooling, internet and other business utilities.
Wrapping up
Any one of these tips is a great first step towards your goal of reducing business costs. Aim for a nice mix of actually cutting costs (e.g. canceling that software you never use) and improving efficiency. The latter saves time, which as the saying goes, is money.
Of course, the best methods for reducing your business costs depends on what works best for you and your team.
Take some time to audit your current expenses, review the new platforms and tools, and evaluate where you can redistribute resources. From there, you can figure out how to slash your budget and grow your profits.
