Entrepreneurs are always looking for ways to reduce costs and maximize profit. However, doing so is always easier said than done. More times than not, cutting costs means reduced product quality or rollbacks on service, which can have a devastating impact on sales and ultimately doom the venture before it has a chance to gain traction.
To successfully lower costs without compromising your business, you need to know where to make cuts and where to avoid them. Finding clever ways to save doesn’t hurt, either.
With this in mind, let’s take a look at eight cost-cutting tips for small business owners:
Reduce energy usage
Many small businesses use large amounts of energy. Common examples include bakeries, dry cleaners, and restaurants. Cracking down on energy usage is an excellent way for these types of businesses to significantly lower costs. If participating in a demand response program, small business owners can even earn money by lowering energy usage. These programs work by having companies agree to reduce energy use during peaks in demand.
Limit business travel
In a world where everyone can communicate via video chat and work remotely via cloud-based software, business travel is mostly unnecessary. With this in mind, reconsider your upcoming trip to New York or Los Angeles. While many aspects of business still require people to travel, anything that can be done without booking airfare and making hotel reservations is sure to save money.
Automate where possible
Every business needs to make an effort to automate as much as possible. Not everything can be assigned to robots and artificial intelligence, but more business tasks are added to the list every year. Whether it’s something as routine as bookkeeping or as unique as assembling parachutes, if there’s a way to replace a person with technology, small business owners want to consider the long-term cost-saving benefits before balking at the upfront investment.
Invest in maintenance
Appliances, devices, machines, and systems all fail at some point. It’s only a matter of time. With this in mind, business owners want to avoid costly repairs by investing in routine maintenance. Scheduled cleaning, monthly inspections, and preventive care are crucial to keeping vital business components operating without fail.
As the saying goes, if you want something done right, you have to do it yourself. Doing so also helps to save money. Whether it’s handling the register, mowing the lawn, or stocking the shelves, there’s no job too small for a small business owner interested in cutting costs.
Not everything can be done on your own. Small business owners often rely on the insights and expertise of specialized professionals. While it’s in your best interest to hire full-time staff to fulfill key roles in your company, many duties and tasks can be outsourced as a way to save money. Accounting, marketing, and cybersecurity are just some examples of responsibilities you could outsource to lower costs.
Consider coworking space
The growing popularity of coworking space is a testament to the cost-savings it affords entrepreneurs. Rather than spend thousands each month on a dedicated business location and all the trappings that go with it, why not spend a fraction of that on renting a workstation month-to-month? It’s an especially viable option for small businesses that operate exclusively online but still need an office environment to conduct day-to-day operations.
Adjust your offerings
The saying “the customer is always right” doesn’t imply that customers get to say and do whatever they want. Instead, it means customer preferences should determine the inventory you stock, services you provide, and hours you operate. Doing so saves time and money. For instance, let’s say a bakery sells out of cookies every day but throws away their cupcakes every night. Rather than keep selling cupcakes, they should shift entirely to cookies (or make better cupcakes!)
Savvy small business owners love finding ways to save money. However, it’s essential to do so without compromising the integrity of products and quality of service. Fortunately, there are multiple ways to reduce costs that don’t negatively impact the way you do business.