Most companies need to scale down or reduce spending at one time or another. Your business may need to take cost-cutting measures for various reasons. Perhaps sales leveled off or dropped. You could be going through an economic downturn. Whatever the reason, there are things you can do to help reduce your spending. Here are five measures to consider.
1. Conserve Energy
Energy conservation is suitable for your bottom line. It is also good for the environment. Your utility bill is a significant budget item, and it can also be unpredictable at times. Fortunately, you can make efforts to reduce energy spending. The scope you take may vary according to your budget and facility.
Small steps include programming your thermostat, installing sensors so that lights turn off when no one is there, and powering down equipment at the end of the day. You can also take bigger leaps into energy conservation by hiring a company specializing in energy management solutions to learn how you consume energy and where you can save.
2. Evaluate Financial Accounts
It may be time to evaluate some of your fixed financial account expenses. These may include insurance, loans and banking. Shop around for less expensive insurance policies. If you find a comparable policy with a lower rate, ask your insurance agent if the company can match it. You may be able to pay less for your current policy without the hassle of switching.
You may be able to refinance a business loan and get a lower rate. Finding a better rate is one thing, but you’ll need to find out if refinancing costs exceed your savings before you go forward.
Talk to your bank about your rates. You may be able to negotiate or switch to an account with a better rate and save on banking fees.
3. Reduce Physical Space
The more space your business occupies, the higher your utility and real estate costs can be. Say, for instance, you have a couple of warehouses. You’ve always had them, but now they have space. Can you move your inventory into just one warehouse and lease the other one? Another option is to sell both warehouses and lease a single but larger space.
Many offices have transitioned to remote work. Some employees may have returned, but they may not work in the office full-time. Others may work remotely on a permanent basis. If you need less office space now, you may be able to relocate to a smaller place. You can also move everyone into a portion of your facility and rent out the unused part.
4. Increase Digital Marketing Use
Digital marketing is not only a good way to advertise in today’s business world, but it is also cost-effective. You can create pay-per-click ads or post on social media for a fraction of the cost of traditional advertising. While you shouldn’t abandon any conventional methods bringing in sales, you can consider scaling back and increasing your digital marketing efforts to balance things out.
Word-of-mouth advertising often stems from digital marketing and social media campaigns. As people patronize your business and build a relationship, they are more apt to share their good experience with others. People tend to trust recommendations from those they know, so word-of-mouth advertising is effective and costs nothing.
5. Reduce Supply Costs
If you’ve been using the same suppliers for a while, it may be time to renegotiate with them or find less costly ones. Proceed with caution, though; sometimes a good business relationship is more valuable than any cost savings you get by switching vendors.
Cost-cutting measures are a reality for most businesses. They aren’t always easy, but they don’t have to be completely awful. You may discover that your new arrangements work better for you. If they don’t, you may be able to change things back once your bottom line looks better. In any case, don’t be afraid to try something new to help your company save money.