In an uncertain economy when every penny counts, even the smallest increase in revenue or reduction in expenses can have an impact on company profitability. The good news is a large-scale company overhaul isn't necessary. It's often simple, common sense steps that improve the bottom line, especially for a small business.
Mid-year is a good time to step back and look carefully at our business practices. What are we doing well? And what can we improve?
1. Reduce supply expenses.
Save money on office supplies by contacting vendors to let them know you’re price shopping. Look outside your pool of traditional vendors. Large discount suppliers like BJ's, Amazon or Wal-Mart can often beat traditional office supply vendor prices.
2. Cut production costs.
As a business owner, you're always looking for ways to cut material costs, and optimize your resources. Here are a few suggestions:
Try selling leftover cardboard, paper and metal instead of sending it to the recycling center. Also, consider ways to use your waste to create another product.
Make sure you're getting the most out of your production real estate. Centralize or consolidate the space necessary for production. Lease unused space to another business or individual—it can be as small as an office or as big as a warehouse space.
Track and measure the operational efficiency of your business, in order to adjust and optimize the use of available resources. Set performance parameters that reflect your efficiency goals and offer incentives when those goals are met.
3. Lower financial expenditures.
Look at your insurance policies and financial accounts for places to save money.
Save money on insurance by comparing providers for the most competitive rate; then ask your current lender or insurance provider to match that rate.
Consolidate insurance policies or bank accounts if possible.
Evaluate insurance policies to make sure you're not over-insured or duplicating coverage.
Don’t take on unnecessary debt. Do a thorough cost-benefit analysis and future forecasting when considering business expansion. Consider the opportunity costs and the effect of debt payments on cash flow. Excess debt affects company rating, interest rates and the ability to borrow in the future.
4. Modernize your marketing efforts.
Of course, you don't want to eliminate paid advertising that is working; however, it can be worthwhile to take a look at some cheaper alternatives.
Build your customer e-mail list and implement a referral program. A recommendation from a current customer is far more likely to result in a sale than traditional marketing.
Network more, advertise less. Clients are more likely to hire a business with a face they recognize.
Cut marketing costs by doing more in-house.
Increase social media use and reduce traditional marketing.
5. Use efficient time strategies.
Optimizing productivity effectively lowers your cost of doing business. Remember, wasted time equals wasted dollars.
Minimize distractions and limit access to time wasters. Use apps like Focus Booster or Rescue Time to help employees focus and concentrate to stay on task.
Utilize software such as Paymo and Toggl to track employee time usage, time spent on different types of work activities or projects and billable hours.
Set expectations for a reasonable amount of time to complete certain types of activities or tasks. Offer incentives for meeting or exceeding those expectations.
Schedule business activities and encourage employees to adhere to the daily or weekly schedule.
Schedule a predetermined block of time for meetings. Make it clear that you expect participants to be on time, to stick closely to the agenda and to wrap up at the appointed time.
6. Harness virtual technology.
Reduce business costs by operating in a virtual manner whenever possible.
Virtual meetings help minimize travel expenses and virtual offices can eliminate the need for physical space. While we certainly don't want to eliminate personal contact altogether, save it for the instances when it's most beneficial.
Technologies such as Google docs (soon to be Google Drive) or Basecamp centralize company documents and product collaboration as an alternative to paper documents and meetings.
7. Narrow your focus.
As a small business owner, I find narrowing my business focus to be one of the most effective strategies to improving my bottom line. By limiting the types of services I offer and projects I accept, I am more productive and produce higher-quality work.
Another way to narrow your business focus is to subcontract. Rather than turn away business, maximize your capacity by subcontracting pieces whenever possible. More projects equal more revenue, while subcontracting equals lower expenses. The result is a better bottom line.
8. Make the most of your space.
Analyze your current use of physical space. Overflowing storage, too many supplies, piles of paper files and inefficient placement of furniture and equipment are common space wasters.
Consolidate or centralize the different functions or departments of your business. Use space for dual purposes. A meeting room that doubles as a break room or a storage room that holds copy and fax machines for example. The opportunities will vary depending upon the nature of your business.
9. Maximize your employees' skills.
Assess the current usage of employee experience and skills. Give responsibilities to the employees with the most skill and efficiency in those areas. Don’t use expert sales people for word processing or “numbers” people for design functions. It's often necessary for one person to be responsible for a variety of tasks, but consider exchanging some of those tasks with another individual who shows greater efficiency.
10. Focus on quality.
Quality sells whether in the form of products or services. Satisfied customers increase sales through referrals and repeat purchases. Higher quality and a solid reputation allows you to charge higher prices, which equals higher revenue and a healthier bottom line.
What have you done well so far this year? What are you planning to improve?
Royale Scuderi is a freelance writer and success coach. She is the founder of Productive Life Concepts and has been featured on top rated blogs such as Stepcase Lifehack and The Huffington Post. You can also find her musings on life and business at GuardWife.com and Twitter.com/RoyaleScuderi.