Where to cut business costs
The current economic climate is going to challenge individuals, families and businesses tremendously. As a recession looms and inflation continues to grow, consumers are feeling the squeeze when it comes to spending and this will undoubtedly be felt by businesses alike. The threat of cutbacks and redundancies is an ever-present concern for all involved, but business owners will want to do their best to ensure that they can protect the livelihood of their employees. One way this can be done is by finding ways to cut costs in other areas rather than making people redundant. Below we explore some of the key areas you can consider.
Supplier costs are perhaps the most significant and direct costs of all. If you’ve been loyal to one supplier, ask if they can provide a discount. If not, compare prices around the market to see if you can get a better deal – online suppliers are often cheaper because they have lower overheads. This could be for office supplies, raw materials, stock or indirect costs like personal protective equipment. Focus on your biggest costs because this is where the potential savings can be most significant.
Reconsider the value of your space
Ways of working have changed drastically in the last 2 years. More people are working remotely in certain industries and this has seen many businesses opt for smaller offices. This could be a valuable step to take right now with energy prices continuing to skyrocket and team productivity increasing for many while working from home. Reducing your office space or even moving everyone online could be a massive cost cutter. If you’re in a brick-and-mortar business, consider how you can make more of your space by trying to find new revenue streams that can effectively boost your profitability.
Switch utility and insurance providers
Utility prices are ridiculous for personal and business accounts at the minute, so achieving any sort of discount here will be a big win. Finding ways to save energy should also be a priority to cut costs where you can. Insurance is a necessary expense for businesses of all sizes, so compare providers and see if you can find a cheaper deal. Although be wary of any policies that will provide less cover, because this could cost you more in the event of a claim.
Focus on your cash cows
From a strategic standpoint, one way to effectively cut costs is to streamline your business operations by focusing on your cash cows or more profitable revenue streams. These are typically more optimised and generate more revenue for your business and so should be prioritised to protect your financial health. Pause or stop product lines or services that are losing you money because it makes no sense to continue these when the economic climate is receding.