Reducing costs and increasing profits. Oof. It’s going to be a tough one in 2022! Reading this blog might sound as if making a few cutbacks and changes here and there is a simple task but in reality, it definitely is not. With the recent hike in the cost of living, the upcoming wage increase and an increase in the cost of materials or products, there is more pressure than ever on businesses to survive in a post-pandemic world.
When materials or products are in high demand, this causes cost-push inflation. For example, if companies use copper in the manufacturing process and the price of the metal suddenly rises, to compensate, companies might pass those increases on to their customers.
Cost-push inflation can occur when higher costs of production decrease the aggregate supply (the amount of total production) in the economy.
As a business you will want to keep up with the latest trends so you can maintain the attraction of customers so reverting back to old processes will not work this time.
So how can we reduce business costs? Let’s explore:
- Workforce Management Software
All-in-one Software like Bizimply can help you reduce business costs and optimise your business.
With a Bizimply you can calculate payroll with GPS powered time tracking. In some cases, there is a Timestation app located on site or employees can clock in right from their mobile phone, employees can clock in and out and these hours are automatically recorded, GPS location is tagged and correspond directly to each individual’s timesheets within your employee management system. Accuracy of hours worked will cut down your labour costs.
Bizimply provides managers with the ability to effectively manage training and onboarding of new starts and current employees. Record what training your employees have completed in their employee profiles as well as get updates when their next training is due so it’s never missed. Onboarding with Bizimply is easy as you can send documents to new starts to be signed, store all documents in one safe and secure location, which can be accessed at your convenience. Not only are these processes seamless but it gives the employee an insight to the professional running of the business and an enhanced onboarding experience.
Reporting with Bizimply is powerful. Using these reports gives managers deeper insight into their data and can be used to identify opportunities for improvement within the business, for creating smarter teams and schedules, for identifying areas that are costing and where to scale back on your costs.
With an employee scheduling software, smarter schedules can be created to ensure every shift runs like clockwork! Smarter scheduling enables you to have the right range of skills for every shift to provide the best experiences for your customers. You can build intelligent employee schedules with Bizimply’s Forecasting tools; forecasts based on target Labour/Sales % by location and by day. This allows you to stay on target! Build a schedule that is based on different requirements, provides staff with necessary shift information and more.
Ensure compliance: keep your team compliant with digital documents such as employee handbook, workplace policies etc that can be signed with our E-Signature integration. As well, get compliance alerts when building the schedule so you know you are giving staff the right amount of working hours agreed within their contracts.
Even minor adjustments can maximize productivity over time. Automating retirement savings deductions with software can save you tons of time in the long run, but the right retirement account can do much more than that.
For example, safe harbor 401 (k)s have a mandatory employer contribution built-in and are exempt from IRS nondiscrimination testing. You can learn more about this account by reading this safe harbor 401(k)s guide on forusall.com.
Paid advertising is an expensive way to try and get noticed. There are definitely some alternatives that you can consider to reduce business costs.
Word of mouth; people love to talk! Get your customers to spread the word about your business, new products, new menus, new events taking place.
In house marketing is a much cheaper way to get your business on the map (or staying there). There are copious amounts of resources available online that you can use to identify different ways of marketing your business.
There are social media and digital marketing courses that can help you excel. Use social media platforms to increase your online presence, use these networking tools to connect with your customers and potential prospects.
Through these platforms, show what is happening at your business; for example; go behind the scenes in the manufacturing factory or into the chef’s kitchen. Your audience will love content like this and it will drive their want for a product or the need to visit a restaurant.
Set a goal and create a strategy and you’ll be good to go. Just ensure that you’re being genuine and really connect with your audience.
- Buy Refurbished Equipment
Brand new, retail-price equipment can be a huge business cost and it’s one that can be easily avoided. So, when thinking about how to reduce business costs, start researching for equipment or furniture from places that may be closing down or outlet suppliers. After all, if it still works and has a track record of annual servicing then there is no reason to not buy it.
Remember that refurbishing doesn’t mean just one thing, it can involve reupholstering, adding a new finish or a different seat, and even painting some old furniture.
Think about all those Pinterest before and after projects you see, it takes a simple touch and lots of patience to transform used equipment into something you may find more in line with your style.
- Cut Down On Production Costs
There are ways to reduce business costs like material costs and to optimise your resources. You could try looking for different, cheaper suppliers that still maintain the quality of the product you sell. Adjust and optimise resources by tracking and measuring the company’s operational efficiency. Set performance parameters that reflect your goals and offer incentives when goals are met.
Implement a strict policy within your business to save on electricity where possible. Encourage staff to turn the light off when they leave the room. Unplug unused electronics, use natural light where possible in order to reduce business costs. It’s a simple way to do it, but one that is often overlooked.
Another option is to look at your supplier, have you got the cheapest one on the market? Doing a competitive analysis may pay off!
In addition, it can help to call your local electric company to have them run an electricity audit so you can better understand how electricity is being used by your business and identify the areas to scale back.
A few other tips include: changing the lightbulbs to energy-saving options, check for air leaks, replace the air filter, set the thermostat so you don’t change it often if there is a refrigerator then set it to 35–38 degrees, simple changes can make a difference.
- Shop local
Businesses are often afraid to shop local as they fear that the costs of the materials or products will be dearer than those they may get afar.
However, sometimes that is not the case as local suppliers are more likely to create specialised business deals for you, especially if they know you will be a continued purchaser. It would be worthwhile to price around, of course ensuring that the level of quality you currently provide is maintained.
Other benefits of buying local are that it results in an increase in profits and demand for that business, which then provides more opportunity for jobs to be created within the community.
This could impact your business, more jobs in the community means more people making use of your services or purchasing your products.
Reducing business costs should always be in the back of a business owner’s mind, otherwise profit levels will never be as high as they could be.
Through the tips I’ve outlined above on reducing business costs, there are plenty of opportunities to trial and error, see what works for you and what doesn’t work as well.
Don’t overthink it and have cutting staff on the last of your list as you could leave yourself short. Try a combination or even all of the tips above to reduce business costs at any point that’s needed.