Every business has to spend money in order to make money. Here’s how to keep those ongoing expenses from getting too high and impacting your bottom line.
Take a fresh look at every single expense.
Chances are, some of them have become a habit but can now be either eliminated or achieved in a more cost-effective way.
Re-negotiate supplier and vendor contracts.
- There may be things in there you don’t need anymore.
- On the other hand, you may find that buying more services from one company costs less than piecemealing it out to several suppliers.
- Ask for a better deal from existing suppliers.
- Shop around for more favorably priced suppliers.
Allocate more marketing efforts to free or low-cost channels.
- Word-of-mouth and tell-a-friend promotions to existing clients.
- Social media campaigns.
- Strategic partnerships with other local businesses.
- Employee sales competitions.
- Testimonials from satisfied clients.
Centralize purchasing.
One person in the company should handle it all, from office supplies to phone/internet providers to equipment rentals. This person will:
- Prevent duplications, unexpected shortages, and confusion.
- Be good at wangling better deals, concessions, and discounts.
- Shop around for the best offers.
Re-think your office space.
- Do you really need to be leasing so much space?
- Do you have too much inventory/equipment on hand, taking up storage space?
- Is there another space available that offers equally good access for current and prospective clients at a lower rate?
Control labor costs.
- Avoid paying overtime by fine-tuning scheduling or converting to part-time employees.
- Reduce turnover and hiring expenses by maintaining a happy, fulfilling work environment.
- Cross-train employees to fill more than one role.
- Prevent time theft with an app that tracks actual hours worked.
Solving the overhead problem is all about baby steps. Chip off a bit here, a bit there, and keep a year-round watch on expenses. It will all add up to some nice, healthy profit margins.
