Cutting costs is an inevitable part of growing your business, especially in an economic downturn. There are ways to save that drastically change your business, and other, more subtle approaches that can maintain the integrity of your operations.
The trick is to take an honest look at how you're spending and find small ways to save.
The following are ideas for cutting costs without cramping your style:
Know the ins and outs of your finances.
Before deciding what to cut, you must know exactly how you are spending. Organize your expenditures into four categories: taxes, savings, necessities, and wants. Draw graphs that visually display what percentage of your revenue goes to what category so that you can get a true picture of what is draining your pocketbook. Then focus on what you can cut within each section.
Change your consumer habits.
Don’t change what you buy, change how you buy it. It doesn't make sense to buy four glasses of the same wine at a restaurant when you could have ordered a bottle for much cheaper. Buy store brands, search the papers and web for coupons, and order items in bulk. If you buy repeatedly from a supplier, negotiate a discount. Most companies will strike financial deals with loyal customers.
Cut waste in the office.
Do employees turn off lights and computers at the end of the day? Do you print with colored ink when you could be using black and white? Do you recycle barely used paper? Do you use real glasses instead of paper goods in the kitchen? Do employees take public transportation instead of taxis when they can? Do you email instead of using costly snail mail? Is your office constantly blaring the air conditioning, even on days that are not that hot? These tiny changes in behavior can end up saving you a lot of money without altering how you operate your business.
Consolidate backroom functions.
Human resources, finance, accounting and office management roles must be performed, but that does not mean you have to hire a different person for each one. Train one very efficient staff member to take care of the vital tasks; or if there is too much to do, bring in part-time employees. You will save money on costly salaries.
It sounds counter-intuitive to cut costs by buying new software, but new computers and office equipment are faster, cheaper and smaller. One example is the new liquid crystal display (LCD) monitors. They use less energy and will ultimately save you money.
The easiest way to lose money is not to bill clients properly. Make sure you stay on top of your account book to collect payments when they are due. Charge late fees when appropriate.
Spending what you don’t have can lead to expensive interest rates that increase your costs. Pay your credit card bills timely, even if that means using money allocated to other functions, especially if the interest rate is over seven percent.
Make a plan and stick to it.
After examining your finances and brainstorming ways to save, write down your plan for cutting costs and stick to it. After you implement your plan (change your supply ordering system, turn down the air conditioning, etc.), hold monthly meetings to make sure you are reaching your targets.