7 Ways to Reduce Business Costs Now
For any business, reducing costs can be a successful way to increase profitability. When you can minimise your overheads and maintain outputs, more of the revenue you generate is profit. However, cutting costs is only effective if you reduce the right costs.
If you inadvertently reduce efficiency through your cost-cutting measures, for example, you could decrease productivity and negatively impact your commercial performance. Due to this, it’s important to identify which costs can be cut and which expenses are critical to your ongoing business success. With this is mind, take a look at these seven ways you can reduce your business costs today:
1. Stop Having Meetings
Many businesses still have regular in-house meetings, even when they aren’t really required. If you have weekly or daily sync ups with your team, consider whether they are actually necessary. All too often, meetings have a limited impact in terms of progressing projects and enabling organisations to meet their objectives. Instead, they waste valuable resources and increase your operational costs.
Whenever a meeting takes place, you’re paying staff to attend. If notable benefits don’t arise from the meeting, this equates to a waste of resources, both human and financial. Moving away from regularly scheduled meetings can be a simple yet highly effective way to reduce your business costs.
When a meeting is required, take steps to ensure that no time is wasted. Review the list of attendees to confirm their presence is needed, for example, and switch to virtual or standing meetings to minimise the amount of time each session takes.
2. Get Legal Advice
Some business owners assume that getting legal advice is unnecessary, until a problem arises, of course. However, this reactionary approach can actually cost you a lot more in the long run. If you wait until an employee takes you to an employment tribunal to get legal advice, for example, you’re likely to spend more on legal representation and damage limitation than you would have on legal advice at the outset.
By seeking advice from lawyers for business, you can ensure that your employment arrangements meet the relevant guidelines and that your workplace is compliant with the appropriate legislation. Furthermore, when you seek advice from lawyers for business, like Didlaw, you can access the professional assistance you need at any time. Whether you’re taking on new staff and creating employee handbooks or managing difficult issues and attempting to resolve employee dissatisfaction, specialist advice from Didlaw can protect your business and substantially reduce potential costs.
3. Switch to Remote Working
Millions of businesses introduced remote working arrangements due to the COVID-19 pandemic, but a considerable number have decided to make homeworking permanent. Technological advancements make it easier than ever to connect distributed workforces, so there’s no need to insist that your staff all operate from the same location anymore.
For businesses, transitioning to remote working can be a fantastic way to reduce operating costs. Renting or financing a building is one of the largest costs most businesses face but this can be drastically reduced when your staff are working from home. Instead of renting office space for tens or hundreds of employees, for example, you can reduce the size of your premises and slash your company’s expenses.
4. Increase Security
Physical losses can be a major problem for some businesses, such as retailers and manufacturers, but every business can experience unnecessary losses due to lax cybersecurity. As well as using physical security measures, such as CCTV and biometric entry access solutions to protect your premises, consider whether your current cybersecurity strategy is sufficient to protect your business.
If you’re hit by a cyberattack, the costs you’ll incur are limitless. From the downtime you experience when your systems are inaccessible to the reputational damage your brand suffers, there are numerous ways a cyber threat can affect your company’s finances.
By optimising your cybersecurity strategy, however, you can prevent hackers or even internal threats from putting your business at risk. As companies face increasing penalties under data legislation and regulations, this is one way that you can be proactive about the costs your business could incur.
5. Improve Marketing ROI
Marketing your brand, products and services might be a necessary business expense, but increasing the return on investment (ROI) could lessen the impact it has on your overheads. If you’re currently generating £100,000 of profit from marketing activities but your strategy is costing you £50,000, for example, you’re spending 50% of your returns on marketing. However, if you can improve your ROI and generate £200,000 profit from a £50,000 marketing spend, this drops to just 25%.
Whether you’re using offline, online or hybrid marketing strategies, there are effective ways to optimise results and increase your ROI. From using predictive analytics to plan more impactful campaigns to optimising conversions with an updated content strategy, increasing your marketing ROI can be a viable way of minimises your overall expenditure in relation to your company’s profitability.
6. Outsource Accounting
Larger enterprises may hire in-house accountants to work on a full-time basis, but this is rarely required for small or medium-sized businesses. However, waiting until the end of the tax year to get your accounts in order isn’t cost-effective either. Similarly, attempting to manage your own bookkeeping and accounts can be a poor use of resources, particularly if you don’t have professional experience in this area.
Outsourcing your accountancy requirements throughout the year can be an effective way to reduce these costs. With no last-minute rush to submit accounts before the tax deadline, you won’t get stuck paying over the odds for professional assistance, and you won’t waste resources throughout the year either.
Many accountancy firms offer managed services, which could be a viable way of reducing your overall accountancy costs and accessing the specialist advice you need. As well as minimising your overheads, this could also be a savvy way of reducing your tax liability and, therefore, slashing your annual expenditure.
7. Start Renting Equipment
People often assume that purchasing equipment is a more cost-effective solution than renting it, but this isn’t always the case. If you need computers, monitors, office furniture or industry-specific equipment, consider whether renting might actually be a cheaper option.
When you hire equipment on a long-term basis, you can benefit from extra services, such as repairs and maintenance, as well as regular upgrades. This can allow you to use the latest equipment and models, without investing your company’s finances in capital expenditures. Furthermore, you won’t suffer losses due to the depreciation of equipment and you won’t need to find the capital in order to purchase equipment either.
How to Keep Costs Low When You’re Running a Business
As you can see, it’s sometimes necessary to spend a little in order to save a lot. Although some costs, such as upgrading your cybersecurity strategy or getting legal advice may seem avoidable, eradicating these expenses could mean that you face increased outgoings as a result. By funding these initial costs, however, you could save a substantial amount in the mid to long-term.
While cost-cutting is important for every business, it’s vital to take a strategic approach. When you do, you’ll be able to determine which costs can be avoided or reduced, without putting your business at risk or negatively affecting your performance.
