Are you hoping to make your business more profitable in 2012? It’s easier than you think. In fact, making just a few small changes in your operations could make a big difference to your bottom line.
If you think I’m exaggerating, consider those news reports about how big companies save money. You know the ones I mean: “Airline X cut $2 billion off its annual operating costs by putting one less pretzel in each in-flight snack pack.”
The lesson for small business owners: Little things add up. Here are some ways you can follow the big guys’ example.
Measure and standardize
Successful, scalable businesses standardize their operations. Have you ever ordered a sandwich at Subway? You don’t think the chain leaves it up to front-line workers to decide how many slices of pastrami to put on your sandwich, do you? No, this is standardized down to the ounce.
You need to measure and standardize what your business delivers, whether it’s how long it takes your staff to design a website, how many ounces of ice cream constitutes a scoop or how much packing material you put in the product shipments you mail out. Standardization eliminates waste, and saves money.
Focus on profit
It’s easy to become complacent if your sales are increasing. But if your costs are rising, your profit margin is probably ebbing, and those increased sales aren’t such good news after all. In fact, rising sales are often accompanied by rising overhead that can eat away at profitability. Conversely, even if you’re suffering static sales, you can increase profitability by cutting costs.
Conserve your energy
Utilities are a big slice of overhead for many businesses. Contact your local utility companies to see if they'll perform an energy audit of your business. Most will come out and do this for free, pointing out areas where you're wasting energy and could be saving. Replace old, energy-hogging appliances, equipment and computers with new, energy-saving ones. Use energy-efficient light bulbs, ask employees to turn lights off when not in use and set thermostats at 68 degrees.
Working from home is a perk most employees love. If you close your office one day a week and have employees work from home, you automatically cut 20 percent from your utility bill (assuming a five-day work week). Of course, you’ll need to weigh the savings against the expense of setting employees up with the proper equipment. However, these days, many workers have the technology they need at home, so the cost can be minimal and the savings sizable.
Companies of all sizes are eager to cut back on business travel. Videoconferencing is now affordable for even the smallest businesses. Make it your default option. When you must travel, try to consolidate trips (visiting several clients in one city or region) and limit the number of employees traveling (take only those absolutely necessary for that trip). Use online tools to find the best deals on airfare, hotels and more.
E-billing your clients saves you postage costs and the time and employee effort to print, stuff and seal a traditional paper invoice. It also helps the planet and speeds up payment. In fact, these days many corporate and government clients prefer or demand e-billing. If you’re not already doing it, look into it.
Don’t go on auto-pilot
These days, so many expenses, from domain registrations to magazine subscriptions to association memberships, renew themselves automatically. It’s easy to just say “yes” and not notice price increases, or that you’re even being billed. Review your credit card statements monthly. Do an annual audit of recurring expenses, and eliminate those that are redundant or that you don’t use enough to make them worthwhile.
How are you cutting costs (and boosting profits) in your business? I’d love to hear what’s worked for you.
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