Finding ways to reduce business expenses can be easy.
Finding ways to reduce business expenses without sacrificing quality is another thing entirely.
Fortunately, there are some strategies you can implement to help cut costs without cheapening your brand.
1. Look at your energy costs.
This can be a great way to help a business cut costs without sacrificing any quality, according to Michael Dinich. Dinich is a financial advisor who owns Your Money Matters, an estate and tax planning firm in Clarks Summit, Pennsylvania. Your Money Matters began advising firms on energy savings after helping a company significantly reduce its energy costs.
“We showed them how to use the available state and federal incentives, and they were able to install solar and energy efficient lighting," Dinich says. "Their energy bill was reduced over 40 percent.
"Not only was their no adverse impact to product," he continues, "the company was able go to their customers and show that they were taking an environmental leadership position as an added value. The goodwill and positive PR was valuable."
—Barbara Findlay Schenck, author, Business Plan Kits for Dummies
Dinich recommends cutting back on energy costs to any business looking to reduce business expenses without sacrificing quality.
“Businesses both small and large can implement similar strategy by installing solar, utilizing a power purchase agreement, leasing land or roof space to solar providers, installing energy-efficient appliances and lighting or having an energy audit conducted and implementing the recommendations," he says. “The best part is, if you use state and federal programs, these programs can be low to no cost."
He suggests searching state and federal programs on the Database of State Incentives for Renewable Energy. And he says that your utility providers may offer energy cutting incentives as well.
2. Buy in bulk more often to help reduce business expenses.
Hey, it works for shoppers. It can work for business owners, too.
Marshalla Ramos-Inde, who owns Bubbly Moon Naturals, a vegan skin care line for expecting mothers, uses plant oils and butters to formulate her products. Ramos-Inde has managed to reduce business expenses—without sacrificing quality—by ordering plant oils in larger quantities.
“It cuts down on having to reorder more often, which would be a more costly expense with current shipping rates," she says.
3. Find less expensive suppliers.
There are exceptions, of course. Nobody, for instance, would suggest to Ramos-Inde that she find a vendor that can sell her cheaper, inferior plant oils.
But you're likely using services for your business that have nothing to do with the product or service you sell.
Barbara Findlay Schenck, author and co-author of a number of For Dummies books for small business, including Business Plans Kit for Dummies, says that you may fare well if you go with lower-priced suppliers that don't affect your brand. For instance, you could go with a service that offers cheaper office supplies, employee uniforms or a janitorial service.
And if you think of your insurer as a supplier, Findlay Schenck says you also might want to reduce your employees' benefits, “if doing so doesn't risk morale or the vitality of the business."
4. Eliminate unprofitable clients to reduce business expenses.
This won't work for everyone. If you own a restaurant or store, you can't realistically send the side salad eaters and window shoppers to the exits.
But for many businesses, you can stop working with slow-paying clients or offering incentives to the high-paying customers.
“Focus on customers who deliver greater profitability for your business," Findlay Schenck advises.
5. Outsource some of your company's tasks.
Are you starting to feel like your company is a human resources company? You know, because so much of your time is spent managing human resources paperwork, instead of working on growing your business?
“I've seen this time and again with the businesses I've helped," says John Jonas. Jonas is the founder and owner of Onlinejobs.Ph, a Provo, Utah-based job site that gives access to employers who want to hire Philippines-based virtual assistants.
“As entrepreneurs, sometimes we want to do everything ourselves because we want to have control or we want to ensure quality. From bookkeeping to recruitment to payroll—[the] tedious work that needs to be done to keep a business running," he says. “But what we don't realize is that when certain processes take too much time away [from] jobs that add value to your service or help with sales, that process is costing your business money.
“And if it's taking too much time," he continues, "that means you're not that good at doing that job to begin with."
So Jonas suggests that if you want to reduce business expenses without hurting your product or service, outsource processes that take too much time. Provided, of course, that whoever you outsource the work to is experienced.
6. Reduce uncollected revenues to reduce business expenses.
Do you do work for clients who then pay you back later. Much later?
Lending money is expensive, and if you aren't in the lending business, Findlay Schenck suggests that you may want to start charging interest or charge late fees to clients who have past-due accounts. That should offset the losses you're taking and help reduce business expenses.
7. Move fast. Time is money.
Whatever you do to reduce business expenses, Findlay Schenck suggests that once you have some expense-cutting strategies in mind, start implementing them right away.
“Set cost-cutting goals with an eye on the clock. Focus on what you can do, not on time or cost-intensive ideas that you might want to do," she says.
You probably also don't want to go nuts with the budget blasting. The goal is to reduce business expenses without sacrificing quality, after all.
Incremental cuts, like shrinking your company's expenses by 10 percent, may be far less disruptive than trimming your costs by, say, 50 percent. That could lead to negative consequences you can't predict. But reduce business expenses in a way that that doesn't hurt your brand, and you may just impress your accountant and your customers.
Read more articles on saving money.
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