9 Ways to Cut down Unnecessary Expenditures in your Business
The main objective of any business venture is to maximize profits for the entrepreneur or the shareholders.
There are two ways of increasing a company’s profits: increasing revenues and cutting expenses. This two-pronged approach never fails to bear fruit for a venture.
The marketing team is always seeking ways of increasing revenue through an increase in sales. Managers are looking out for cutting down expenditure to improve shareholders’ return on investment (ROI).
There are many ways through which a business can cut down its unnecessary expenditure in 2020. There are many other ways of achieving this objective. In the article below, we will discuss a few of them. We will also learn how you can implement them for the maximum benefit of the company.
- SEEK OUT NEW SUPPLIERS AND VENDORS
Every running business has a supply chain for procuring raw materials and other items like stationery and office utilities. The drawback of working with an established supply chain is that your business may not be taking advantage of regular discounts and sales promotions offer from other suppliers and vendors.
You can get good bargains from other vendors if you research the market and compare prices. You will also have room for negotiations with your current suppliers. Rather than using fancy and expensive utensils, the management may propose using custom reusable coffee cups within the office premises.
If you can find out new suppliers and vendors or re-negotiate the current ones, it will significantly cut down your business costs.
- CONTROL YOUR FINANCIAL EXPENSES
Financial expenses are one of the expenditures of any business. These include insurance premiums and mark-up on loans etc.
You can cut down insurance expenses by researching the market and comparing premiums with other insurance companies. A general insurance contract is valid for one year only. You can opt for another insurance company with a low premium or negotiate the rates with your existing insurer at the time of renewal.
Businesses obtain loans from banks or financial institutions for managing their cash flows or carrying out expansions. Cutting down mark-up expenses would mean staying clear of loans altogether. If necessary to obtain a loan, go for short term loans from those financial institutions offering lower interest rates.
- INCREASE YOUR OPERATIONAL EFFICIENCY
Operational efficiency means carrying out the business’s day-to-day operations in an exact manner without wasting time or resources. It would mean tracking your business operations’ efficiency at every level to optimize productions within the available resources.
One way of increasing operational efficiency is to set standards and then gauge the results against those standards. Set achievable daily goals and check whether the team meets them.
- REDUCE UNNECESSARY TRAVELLING
Meetings, seminars, and business conferences are part and parcel of any thriving commercial entity. However, they have a financial cost, which can decrease the profits of the company.
You can cut down this expenditure by reducing traveling to a minimum. You can also arrange meetings, seminars, and conferences through modern applications. These applications allow the simultaneous participation of dozens of people from around the globe.
- REVISE YOUR SPACE NEEDS
Every business entity needs space for carrying out its operations. You need space for production, and also for establishing your office. Storage of raw material and finished products also require customized rooms.
Land or space is the most important and expensive element of a business. If you rent or lease space for the above purposes, the monthly rental expenses will burden your profit and loss.
You can do little about production space; however, you can reduce office space by redesigning it completely. Businesses realize that some of their staff do not need to attend the office. They can carry out their functions from their homes. Such an arrangement will also save office space, which you can use for other purposes.
Every inch of space that you can save will translate into monetary saving.
- EXPLORE INNOVATIVE MARKETING CHANNELS
The advent of social media channels has offered an excellent opportunity for business to showcase their products to prospective customers with minimum cost.
Traditional marketing channels like newspapers, magazines, and billboards are also useful, but they are costly. Internet marketing is comparatively cheap and equally effective.
Exploring new ways of marketing your product will allow you to cut marketing costs without hurting your sales.
- GO FOR OUTSOURCING
There is a glut in the global information economy. Consequently, service providers are offering their services for competitive prices. It provided an opportunity for businesses to obtain more value from a relatively lesser cost.
For example, if you seek to design a business logo, you don’t need to hire a full-time designer for this purpose. You can outsource it to a freelance logo designer in exchange for an agreed price.
You can also outsource your accounting and other support functions to freelancers rather than employing full-time employees for these tasks.
- CONTROL EXTRA PERKS
Most business people think that they need to treat their employees with extra benefits and perks. It is good thinking. However, every business does not need to compete with multinationals and large organizations to provide perquisites to staff.
You can reduce extra perks like annual dinners, picnics, and parties to save costs. Alternatively, you can give your staff small bonuses so that they are also happy with the appreciation of their work and associated monetary benefits.
High perks can wait until your company starts making hefty annual profits.
- DO IT YOURSELF
There are some tasks related to business that requires specialized knowledge and expertise. But there are some things that you can do yourself. These tasks include creating an online store. You can hire a professional to build your store, or you can do it yourself with the help of resources like Shopify. Similarly, you can write your blogs by carrying out minimal research for keywords. You can even use free internet resources to develop your marketing material.