Companies know that having too much on the expense side can be deadly to profits and financial plans. The things on that list may not jump out as frivolities, though, and the decision about which products and services to cut is a difficult one. Make the wrong choice and your customers and employees could feel miffed, or worse.
The first thing to do is sit down and decide if the determination to cut costs came about organically or as a reaction to something else. If you notice that business banking has been a bit slim, you may not need drastic cuts on cost, but rather a gentle marketing nudge in the right direction. If, on the other hand, you have been hemorrhaging funds for the last few months to a year, it is time to sit down at the negotiating table and figure out what to chop.
Change to digital
Using a paper system is wasteful, unnecessary and cumbersome. It also makes business continuity harder to maintain, as a single original copy with no duplicates can easily be irrevocably lost. Getting everything computerized, on a network and in the cloud makes accounting easier, improves transparency and reduces the cost of man hours dedicated to manual entry.
Bloomberg wrote that this switch to electronic systems helped save Home Depot more than $80 million a year on its regular expenses. The company used a sort of internal online banking program designed to help managers at the store level plan orders, compare budgets with others in the area or on the national level, keeping everyone's budgeting out in the open to implement more cost savings. Knowing how expenses look compared to annual expectations will help keep excess spending at bay.
Reduce energy drain
Getting rid of physical documents can also help cut down on the amount of energy your business uses. Instead of dedicating all that extra storage space to housing old papers, you can consolidate them into energy-efficient computers and static drives, making it easier to keep track of company records and reducing your utility bills each month.
Government Technology explained that even businesses in a tight spot might benefit from an additional financial outlay in getting an HVAC-compliant or energy-rated location, as these will increase the overall health of a financial plan. The source stated that a municipal building in Merced, California, invested in a $7 million building upgrade that is creating more than $30,000 per year in savings. Even when that commercial loan is paid off, the entity will continue to enjoy that innate income.
Monitor and enforce policies
A basic principle for cost savings is to make sure that employees are following the guidelines you put in place, Entrepreneur Magazine stated. For cloud storage, be certain that workers are actually using the systems instead of finding other ways that are easier for them. It may mean a little extra education is needed, but otherwise the redundancy and lack of correct data input could harm savings and continuity.
Just like the case with Home Depot, creating a work environment that requires accountability for incurring expenses is healthy for saving money. Make workers mindful of the supplies they use and waste, encourage reusable mugs and flatware instead of providing these in the breakroom, remove paper from the office space and find other ways of avoid buying more products unnecessarily.
If you need more help coming up with ways to cut costs at your business, talk to a financial advisor for additional tips that could help you reduce overhead and increase productivity. These opportunities proliferate rapidly if you know how to isolate the real problems within your business.