While it’s an intimidating number to look at, the truth is that eight out of 10 businesses fail within the first few years. If you don’t want to be one of these businesses, you need to position yourself for some basic cost savings.
In order to cut back on your spending, put yourself in a position to lower costs and find new ways to generate revenue.
Here are four ways to ensure cost savings without impacting your productivity or efficiency one bit.
1. Rethink Your “Office”
If you’re a small to medium-sized business, how much office space do you really need? If you’re the type of business that meets with clients, do you have an office to impress clients when you could just as well meet at their office?
Reconsidering your office space is a way to boost your productivity while cutting costs.
For all of the time your workers spend commuting to your office, they could stay at home or get an earlier start on the day. Rather than requiring everyone in the same space, consider ways to get them to work together outside of a traditional office.
Another option is to use a co-working space for meetings and team projects. This puts the cost of maintenance and upkeep on someone else’s shoulders. Most employees appreciate the ability to work from home or come into the office on a flexible schedule.
Working arrangements become more flexible, making room for scaling up or down as the workload changes.
2. Consider What You Can Outsource
With the need to be both professional and save money, many businesses take the path of virtualizing or outsourcing some of their work.
Every company needs a web designer, and most companies working online need a system administrator. While these highly skilled roles are in high demand, with lots of great talent out there, not every company can afford to hire them. Rather than trying to afford to compete by stretching payroll, outsource some of this work.
While many companies avoided outsourcing for years because of ethical concerns, the U.S. is now the place for outsourced tech workers.
Since most of these workers can do what they need to do from anywhere with an Internet connection, you’ll draw on talent from around the country. Let outsourcing companies do all the recruiting work for you, and get the best out there by hiring managed IT services.
Spare one of the biggest expenses on your payroll without compromising the quality of services and security you provide to clients.
For other roles like reception or assistants, consider hiring virtual workers. Hiring an answering service doesn’t mean just having someone to field phone calls. You’ll get a virtual assistant to manage your schedule, perform basic functions, and answer common questions.
When it comes to accounting and payroll, outsource these roles to keep your finances in order without going over the budget.
3. Go Green to Save Green
If you’re in the manufacturing or production sector, going green requires a big investment upfront. However, when you nail lowering costs, you save on utilities for years to come while having the best equipment around.
Thanks to government tax credits, it’s never been easier to go green. Installing wind turbines or solar cells on site can help defray costs while also taking advantage of tax write-offs.
For companies that work in manufacturing, look at new ways to handle your waste. If you create organic waste, find a way to turn that waste into compost and sell it off locally. If you create scraps that could be sold, market them to other local industries or producers.
If you’re spending money on hauling or shipping on a daily basis, reconfigure your schedule to save on fuel costs. Cut back on all of the items that you can, and you’ll lower your carbon impact and inspire other companies to do the same. In the meantime, you’ll be saving money on utilities and peripherals.
4. Use Your Space Better
If you own a warehouse or an office, there are ways to get more out of that space. Most companies use space inefficiently and spend too much on storage and workspace.
Adding a simple partition, storing your supplies better, and moving desks closer together allow you to create a second space to rent out. When you lease space to other businesses, you cover the overhead on behalf of your own company. If it doesn’t impact your company at all, you’ll end up lowering costs while creating a more efficient office.
For product retailers, space makes a big difference. If you’re still scaling up, new products and items get added to your warehouse or shipping facility all the time. Put into place some regulations for adding new items and reorganizing space so that as each item comes in, it’s neatly added to the existing system.
When using space efficiently, workers can move faster and know where everything is. As each minute of extra time is trimmed, your team becomes more productive and starts working like a well-oiled machine.
If you’re working in a highly specialized sector, only working about eight hours a day, you could team up with other companies in your region. Rather than carrying all the equipment costs on your own, give them the other eight to 16 hours during the day – and you’ll save on tools and equipment.
Cost Savings Require Diligence
Most of your cost savings don’t come from a single purchase or failure. They come through changing your spending habits and the way that you look at your business.
When you cut down on spending every way that you can, you create a culture of economy that your employees will fold into their work.
If you need funding for your next expansion, check out our guide to credit for business owners.