We are living in challenging economic times; that said, many small businesses are having to rethink how they operate and where they spend their money. In many ways, it is about survival and making it through until things return to some semblance of normal. Cutting costs isn't just a smart move for many companies, it is now a necessary one. In this article, we look at some of the ways that small businesses are cutting costs during this challenging time.
Revisit supply costs
No rule says you have to stick to one vendor or supplier. While you may have been working with them for years, it may be time to either negotiate, shop around, or both. Let them know that you need to try and find lower-priced alternatives; they may just come back with a better offer. And you can also think outside the box here and check out some larger discount suppliers who might have more attractive pricing than traditional suppliers.
Trim production costs
This can mean, for instance, renting out space that you are not currently using for production. More practically though, it is likely going to be a matter of really taking the time to evaluate production efficiency. Are you reaching your objectives? How is performance overall? What can be adjusted to maximize performance and at the same time cutting costs?
Figure out your expenditures
Now is the time to take stock of all debt and figure out where you can try and streamline those particular expenditures. Too much debt can cripple a company quickly. Are there smaller debts you can pay off now and thus have that extra money monthly? Also, take a look at your various insurance policies and premiums. Shopping insurance around can potentially save you a great deal. As with shopping around for suppliers, letting your current insurance provider know that you are looking for a better rate could be a good negotiating strategy.
Cutting costs on marketing
You do have to have marketing efforts in place. That said, there are ways to streamline such efforts and therefore cut down on the overall cost. Taking greater advantage of social media is one strategy that you might take a look at. There are a ton of things you can do for free when it comes to social media that still have a decent impact as far as extending your reach and increasing brand awareness. Also, utilize your email subscriber list. These are people who want to hear from you—stay on top of sending them timely content. Additionally, keep in mind that the more marketing you can do in-house, the more money you will save—so get creative!
Don't waste time
You would be amazed at how much time is wasted during company hours on any given day. To this end, there are things you can start doing that will help you minimize all of that wasted time. Reduce distractions. Distractions are perhaps the biggest culprits as far as why we waste time. Also, you might try and implement software and systems that can monitor employee time usage. This way you can pinpoint the weaknesses and then encourage employees to adhere to certain daily/weekly schedules. When it comes to meetings, be sure to maximize the amount of time spent. That is to say, have an agenda, cover the necessary items, and don't waste time with tangential topics that don't relate to the matters at hand.
Utilize technology
Virtual technology, especially since the pandemic, has become a mainstay of many business operations. Using virtual technology for meetings and conferences for example can help cut costs significantly. You cut down on any travel costs which might pertain as well as the need for an actual physical space. You can also implement systems that facilitate collaboration, document sharing/signing, as well as communication in general.
Narrow your focus
Maybe you're offering too many services. Could it be time to streamline your product line? This way too, what you do have to offer will tend to be of a higher quality and more focused on meeting your consumer's needs. Another thing you might try to this end is to sub out work when possible to freelance and/or subcontractors. They tend to be more reasonable than having full-time employees and again, you might notice a better quality result overall.
Evaluate physical space
Are you optimizing how you utilize your physical office space? Often business owners don't realize that there is just so much space wasted. You could potentially consolidate some spaces. How are you handling storage? This is another area where if you stop and take the time to evaluate your use of space you might find ways to cut down on costs.
Use your employees' skills to your advantage
Are you utilizing your employees' talents and skills in the best ways possible? Some will excel in one area and some in another. Recognize these differences and assign tasks accordingly, thereby ensuring that you are getting the best return on what they have to offer. Take the time to see who is most efficient in what capacity and play to their strengths.
Make sure the quality is there
Yes, you want to be cutting costs, but don't skimp on quality. Especially now, people prize that which addresses their needs and consequently, that which goes above and beyond in some instances. And when you do have satisfied customers, you also have referrals. So keep that in mind.
First Union Lending is here to help! We work with small business owners throughout the US, getting them the money they need, when they need it—not weeks or months from now. Some have the cash in their accounts in as little as two business days. From short term loans to merchant cash advances, we have the financing solutions to help you weather this storm. Call today and let's get started together.