5 Hacks to Reduce Business Expenses
- 29% of businesses fail because they run out of cash.
- 27.5% of small businesses fail to even survive the first year.
- Most common failure reason stands unacceptance of products in the market
A quick fact check before you jump into the hacks. These shocking numbers are what forced me to compile this guide for you.
A new business eats out more expenses than an old one. An enterprise spends more than a small business or a freelancer on infrastructure. A sole trader invests comparatively less on inventories than a trading firm.
A business may vary in size, type, industry, and niche. Thus, the investment in it. But the ideology of awareness for expenses should remain common practice.
Irrespective of the influence of your company in the industry (size), costs reduction should be a top priority for a business. It is important to grab every possible chance to decrease additional expenses in business to improve profit margins.
With such a huge amount of businesses failing due to cash flow problems. What are your plans to reduce the costs of your company?
1. Employ More Remote Workers
Remote working is one of the most sought after approaches to reducing business expenses. But, with the current times of COVID19 outspread, it has also become an approach to keep people safe.
45% of employees working remotely find it more comfortable this way. General acceptance reasons it saves time and efforts. Thus, improving focus. Not only does it indicates that by employing remote workers you’re improving the satisfaction of employees. But, saves you a lot of infrastructure cost & efforts.
Find out how remote working saves chunks of money for you:
- Saves Rent: an employer saves an average of an additional $10000 a year on every employee when he lets him work remotely. This includes savings from rent, electricity, infrastructure and more.
- Sanitization Services: More employees required more office boys to take care of their needs. Now, with lesser employees, you’re actually saving a lot of cost and salaries.
- Food & Coffee: This might be a smaller expense, but you surely eliminate these costs when your employees are working more remotely.
- Enhanced Productivity: When a lot of hassle and effort is saved from not commuting, the efficiency of team members increases. In the latest survey, it was reported that the average productivity has boosted up to 3 times when employees are working remotely.
2. Invest in Technology
Businesses that invest in technology and fully utilize it save a lot of cost on manual processing.
The impressive AI of technologies has automated maximum manual jobs that required you additional man force in the past. Imagine when in the past you were employing 5 administrative staff members, and now you can easily automate the majority of your workflow to eliminate the need for additional expenses. Furthermore, automation reduces errors to an extent they do not occur.
Listed below are some of the technologies that you can use to enable cost-saving:
- Online Invoicing & Cashflow Management: online invoicing software with AR & AP management are cloud-based software that eliminates the need for creating invoices on paper and managing sheets in files for accounts receivables and payables. The best online invoicing software in the market automate the majority of activities that earlier required human intervention, such as invoice generation, payment reminders, online payments acceptance, credit/discount notes management, data management, and filtered reports generation.
- Staff Management: no manual process can track the exact productivity of an employee in a day accurately. But, staff management software track overall productivity, track time, enhances approval process, task delegation, and increases transparency in the process.
Also, look for free tools to simplify processes such as skype, google analytics, and many more to make your tasks easier.
3. Outsource to Expert Teams:
Businesses around the globe are opting to outsource over hiring in-house teams. It saves cost, efforts, and time while giving expert guidance and trust of getting best.
Here are some reasons outsourcing can benefit your business apart from cost saving:
- Finer Talent: an agency that works particularly in a particular niche will have a pool of fine talents available with them. Therefore, it saves you time from finding out the best ones. Together, they can work seamlessly for your product need with brilliance to offer.
- No additional expenses on training: With outsourcing, you would not need to spend other thousands of dollars on arranging training sessions with the experts. For a company, a training session is a big investment. It takes lot of efforts, time, and money to arrange such sessions that may or may not prove fruitful.
4. Optimize Paid Advertising Spend
In this era of digitization and shift, it is okay to spend the marketing budget on advertising more. But, how are you optimizing its spend matters? How aware are you about your targeting holds the key in the kind of ROI you’ll be getting. Paid advertising should not be your only source of deriving traffic. Because once you’ll stop spending money, you will see a sudden fall in it.
Therefore, to never let your ranking drop carefully manage:
- Search Engine Optimization: track keywords, competitors activities, invest in on-page and off-page activities to derive more traffic organically. Take part in forums and channels to increase your overall visibility.
- Social Media Optimization: currently more than 3. Billion people are on different channels of social media. It has become a great platform to enhance your presence and engage with audiences. Hire expert optimizers that have the ideas to derive traffic organically.
- Closely Monitor Your Expenses
By far, the best cost management hack a business can run is expense recording, monitoring, and management. Analyse every single purchase and investment. This way you will be better positioned and enable cost saving.
Few areas to cut down expenses:
- Analyse travel expenses (include them in projects)
- Be careful with stationeries
- Be rational with freebies
- Infrastructure (Explore before buying)
- Electricity usage
Automate expense management with expense management software to increase the visibility of all your major and minor expenses. You will be able to save more profits by keeping in pace with your expenses.
Reducing business costs has a direct positive impact on the company’s profits. The more you save, the more profitable the business will be. The five hacks mentioned in the article are easy to implement and can bring the desired results quickly.