The current economic climate means more and more small businesses are finding it difficult to stay afloat, let alone profitable. When you reduce operating costs, you have a better chance of succeeding in this uncertain environment.
Itâ€™s been predicted that a whopping 60% of start-up businesses go bust after the first two years of starting up. This is due to careless spending, the failure to adapt to the needs of their clients and customers and the inability to be able to recognize trends in the growing market.
Making a profit should be the end-game for any business, but many business owners spend frivolously and debt is the final nail in the coffin for them. Are there things youâ€™re wasting money on in your small business? Yes! Find some ways to reduce operating costs as a retailer here.
Related: The Complete Guide To Opening And Operating retail Stores
9 Simple Ways To Reduce Operating Costs
Evaluate Your Office Space
Is your business making the most of the space you are using? Could you survive with something smaller? Could your staff work from home reduce the need for huge office spaces?
Hot desking and flexible work can help reduce your office space costs including power, heating, internet, etc. Or what about a less costly location? Large corporations have been moving their call centers and offices from the town to the suburbs. This keeps rental costs down and reduces employment costs.
You can also try this as a money-saving strategy for your small business. Itâ€™s important to remember as a business owner that your wallet is the lifeblood, so spending too much on rent can put you in a difficult position.
Start Online Marketing
With online opportunities such as Google Pay-Per-Click (PPC) and Google Shopping, you can reach a large volume of people who might be looking for something your product or service offers. Paid advertising across social media is a cost-effective way of boosting your sales in this growing social media age.
Having a fresh and functional website is a must to make the most of these platforms, and it is worth outsourcing to a website designer and digital marketing agency. This way, you can spend time on what makes your business successful while increasing sales volumes. The cost of online marketing can be up to half that of traditional marketing, and it is a lot more simple to analyze and assess its success.
Outsource Some Aspects
Small businesses sometimes get caught up in paying someone to fulfill a job role that, quite frankly, doesnâ€™t need to be done every day. Whether itâ€™s HR, digital marketing, or accounting â€“ many small businesses hire people for these roles because they think thatâ€™s what they should be doing. If your company is small, you donâ€™t need to be spending money on these. You can save a lot of money by identifying agencies that specialize in these areas instead of hiring a full-time employee.
Increase Your Technology Use
While it may mean an initial spend, technology can reduce costs and increase productivity over time. As with the point before, there is a variety of software that is designed to meet your needs, that traditionally you would need to hire an employee for. This includes PA duties, accountancy, HR, etc. Apps such as Cortana and or SyncHR can all do the salaries of unneeded employees. Using lots of paper is an outdated method and can be detrimental to both your business and the environment. When using paper instead of computers for filing etc. it becomes easy for important to become lost, thrown in the trash or destroyed. Minimize your businesses carbon footprint and increase your productivity and efficiency by going digital.
And of course, for Inventory and stock sorting, software like Primaseller can help you organize your company and offer your product to your consumer when they expect it.
Get Insured To Reduce Operating Costs Later
It may seem oxymoronic to suggest another expense when talking about cutting costs to your small business. However, this is one aspect that could save you a lot of money in the future. From disgruntled clients to public liability, having the right protection is vital for the success of your moving forward. After all, one wrong legal case against you could bankrupt you before you even begin. Setting the right insurance is vital for the protection of your business. This is equally true if youâ€™re an engineering contractor setting up a business or own an artist studio. There are insurance programs for all kinds of businesses (eg artist insurance).
Reduce Office Supplies By Going Online
Office paper is a needless commodity now, if youâ€™re still printing documents endlessly itâ€™s time to rethink your approach. Making your office paper-free, you can make big savings. That means no more printers, ink, pens/ pencils, correction fluid, staplers, folders, hole punchers, and (of course) paper. Computer software and whiteboards can replace all of these.
Moving all your document storage to the cloud can save your company literally hundreds of thousands of pounds. Cloud computing is so easily scalable, so you only pay for what you need and when you need it. This means no big annual packages or entire software suites to buy when you wonâ€™t need it all.
Ask For Quotes From Different Vendors
If you have the time and the scope to do so, ask multiple vendors for quotes. You can do this for your product catalog, for services and even while choosing which tools to use. This way, you can gain a better margin on your inventory and pay the best market rate for every service you use.
But remember, cheapest is not always the best. You need to find a good balance between a good product that works for you and one that also meets your budget requirements.
Avoid Paying Bills Late
Just like credit cards that accrue interest over time, your bills can quickly get overwhelming. Nearly all utilities are either cut off or penalized when you donâ€™t pay on time. Most vendor invoices also grow to astronomical numbers if you donâ€™t clear them on time.
Set timely reminders to pay these bills and dues. It also helps when you manage inventory effectively to give yourself more working capital. This way, you always have enough cash flow to avoid being late on payments.
Cut Down On Inefficient Processes
If youâ€™re following all these tips and still find yourself short on free cash, think about what may be going wrong. Channel your inner Mary Kondo and do a housecleaning. Perhaps, there are subscriptions you paid for that you donâ€™t use. Maybe, there are stock issues that you havenâ€™t addressed. In most retail operations, inventory is a great source of inefficiency. Start by looking there first.
The Final Word On How To Reduce Operating Costs
When you are a business owner, itâ€™s important to make sure that you are conscious of the nuances and changes within your respective markets. This will help you to gauge how successful your business will be in the coming months. Having a keen business insight is one of the key ingredients that is missing in some startups, but this is a vital part of the process. Once you understand your market and the changes that go on within it, for example, seasonal trends, consumer habits, stock prices, etc, then you can spend and save accordingly. This can be achieved by networking with like-minded professionals and speaking with clients. It also helps to research your market online and keeping track of all of your data for analyzing any patterns that may occur.
Jessica Sullivan: My name is Jessica and I have experience as a previous CEO of a successful small business. After selling my company, I started helping other small businesses to become successful. I also hold seminars and tour universities to advise entrepreneurs of the future. Please feel free to email me if youâ€™re seeking advice!
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