We always think about how to make more money by drawing new clients, but we think too little about how to make money by methods implemented at internal level, by reducing costs.
Reducing costs for a small or medium business and increasing the efficiency of the consumption processes do not need much time or effort.
In many cases, when you need to make expenses, it is all about making choices carefully, with no hurry and smart.
Before beginning to make any reductions, you need to know how your business is spending the money. So, First step: Analysis of the company costs, subsequently you can go to the Costs reduction step.
Subsequently, I will show you 20 useful and simple ideas of costs reduction that will bring you results immediately after you implement them:
20 simple and useful ideas to reduce costs for your business
- Reduction of the energy used. Change the usual bulbs with energy-saving bulbs – on long term, you will notice results in the energy invoice. For heat, I recommend radiant panels. They can save up to 50% of the heating invoice.
- Cutting the expensive travels/events. Analyse the travels you made and see if you had any benefit from them. Try to go only to those events and only on those travels which are definitely useful.
- Use thermal insulation for your office so that you do not lose heat. During winter, you will pay much less for the heating invoice.
- Always use a GPS or a map. If you have employees who are always on the road, try to give them a GPS or a map so that they always go on the short route.
- Monitor your employees who have a company car. They will never use the car just for business purposes. A car ledger, where each employee records how many km he/she made is very necessary. It will help you see how much time that employee actually works, if he/she took the exact route to the places he/she had to go to and if the fuel consumption is justified by the kilometres he/she made.
- Location as cheap as possible. Always look for locations as cheap as a possible if you are renting. Currently, the real estate market is decreasing continuously and you never know when you can find a better and cheaper location.
- Reduction of bank fees. They are small and unimportant, but if you add all of them, you will see that they are very high during an entire year. Look for the banks with the best fees and try to negotiate. If you get involved and look much, you will get customized offers for your business.
- Reduction of telephone costs. For a company with many employees, these costs are quite significant. Try to see how much your employees are talking and, subsequently, ask specialized offers from various telephone companies. If the employees have to talk only among them, you can ask these companies to block all other calls that are not for business purposes.
- Buy second hand. If you have to buy furniture or various objects which are very expensive, try to buy them second hand. They are cheaper and have the same quality as the new ones.
- Reduction of stationery costs. These costs are quite insignificant at a first glance, but if you calculate them at the end of the year, you get quite a high number. Try to make an internal policy for the efficient use of these goods, by which the employees are drawing attention among themselves about the efficient use of the resources.
- Barter instead of money. Try to make an exchange of goods or services with other companies in order to avoid cash expenses.
- Reduction of marketing costs. A very controversial topic and area in each business. Draw up a marketing plan with a set up budget to follow for one year. Do not try to have other marketing actions without something previously established whereas, in most cases, they bring no further benefits.
- Reduction of costs for raw materials. Always analyse your suppliers and look for new ones. Try to take as many offers as possible from the market and choose the lowest ones and those that give you the best payment methods.
- Reduction of costs for courier services. This is a place where much money is lost. A thorough research on each courier company would help you very much in order to see which one is more profitable.
- Reduction of employee expenses. Analyse your number of employees. Do you need all of them? Do you think that a smaller number of employees would cope with the flow of clients you have? If the answer is yes, try to part with those who do not bring added value to the company.
- Outsource instead of having a separate department within the company. There are many areas of a company that are not working directly for the end product. Some of them (such as marketing, HR, PR etc.) can be outsourced, namely you make partnerships with various specialized companies to deal with these areas for you. This will save you the trouble of paying the wages and contributions for several extra employees, plus you will benefit from specialists certified on those areas.
- Get rid of unused assets. Try to eliminate all the assets you have and do not use. This will get you off paying various taxes to the state or various insurance invoices.
- Use new technology. At first glance, they will be costly when you buy them, but they will make a difference on long term. Look for various software, gadgets, machines or other things which help you increase the efficiency of your workload. Thus, you will be ready to start reducing costs in other places as well.
- Set an objective of costs reduction. Set an objective of costs reduction (ex. 10%) for each department/area of your business, without having to reduce production. If you get more people involved in this operation, you will be more successful.
- Budget before all. Try to use a budget or a cash flow before making various expenses. These instruments will help you see now much money you have, how much you have spent, where are most money going to, where are most money coming from and what should you do during the next period of time. This will help you balance the expenses and have constant cost reductions.
All these cost reduction ideas are universal, meaning they can be implemented in almost any company. Before implementing them, I suggest you make the first step, the Analysis of company costs, and then think about each reduction from your business point of view.
Implement only those which you are 100% sure they will bring results. Treat this topic with respect and very responsibly and you will definitely have something to win.
Do you know any other methods?