Reducing business expenses can help organisations grow more agile, more profitable and better prepared for uncertain economic times. In fact, cutting business costs doesn’t have to mean getting smaller – it can just mean working smarter.
But to effectively reduce business expenses, it’s important to have a cost-cutting strategy that’s been carefully considered and is centred around your business’s goals, both short and long-term.
Let’s take a look at how SMEs can benefit from reducing business expenses – and some of the best ways they can do more with less.
Cutting business costs can affect more than the bottom line. By eliminating unnecessary overheads, businesses can become leaner, nimbler and more efficient. Here are some of the top benefits of reducing business expenses:
An immediate impact on the bottom line.
By re-imagining traditional processes and infrastructure to reduce costs, businesses can also increase productivity and improve the employee experience.
Increased profitability even if revenue stays the same.
Greater economic stability, helping organisations weather tough economic climates.
Better cash flow to pursue new opportunities as they arise.
Of course, cutting business costs is easier said than done. After all, how can organisations know what to keep, what to cut and what to double down on?
Here are 10 tips for reducing business expenses and becoming a lean profit machine.
Evaluate your fixed costs. Look at your business’s monthly expenses. Can you cut back on recurring expenses such as utilities and internet? Can you re-negotiate contracts with your existing suppliers? Is it possible to search for new suppliers? You can even consider things such as production costs, as new opportunities are always emerging.
Unlock the power of automation. Automating repetitive, low-value manual tasks can help to reduce operating costs and free the workforce. Intelligent automation can also help improve the customer experience and increase employee engagement, making it one of the most effective tools for businesses looking to get the most out of their resources.
Turbocharge your sales funnel. Even the most talented sales rep can be wasted if they’re pursuing bad leads. Poor leads not only waste valuable time; they can affect employee morale and reduce productivity. To better empower your people, use a CRM (Customer Relationship Management) tool like Sales Cloud to score and rank your leads, automatically surface the best opportunities, and connect the right lead to the right rep at the right time. Leveraging the power of data is a great way to maximise efficiency and make the most out of every opportunity.
Skill up the workforce. Cost-effective, on-demand training programs have made it easier than ever to learn new skills. Why not turn every worker into a multi-hyphenate? By skilling workers across roles and functions, you can get the most out of your workforce, as they’ll be able to help wherever needed. This will reduce the need – and costs – of external expertise, as well as reduce hiring costs.
Use budgeting software. In order to make effective cuts, you’ll need to know where your money is going. Budgeting software can help to predict revenue, calculate fixed costs and track fluctuating expenses. Most of all, it can help you stick to a viable financial plan based around your business’s objectives. Just ensure that you set the right cost-saving benchmarks to track your progress.
Weigh up the costs of physical infrastructure. The pandemic changed the way we work forever. Many companies that reluctantly shifted to remote working found that they thrived outside the limitations of the office. Others have permanently returned to the workplace or have adopted a hybrid approach. Of course, there’s no one-size-fits-all solution, and every business needs to discover how – and where – they’re at their best. If you’re looking to reduce business expenses, look at how much your physical infrastructure costs. Can this be re-negotiated? Can your physical spaces be reimagined?
Reduce IT costs by creating your own solutions. Bespoke technology used to be incredibly expensive, but that’s starting to change. In fact, it’s easier than ever to create custom solutions for your business, even without an IT background. The Lightning Platform makes it easy to build apps by just dragging and dropping components. Or you can simply shop for low-cost, pre-built components on the AppExchange. Either way, spending smartly on tech is key in an economic downturn.
Watch the competition. No business stands alone in the marketplace, so keep an eye on what your competitors are doing. Are they adjusting their marketing strategy? Are they changing their pricing to adjust to the cost-of-living crisis? Are they reducing office space? Are they scaling back investment? Or perhaps they’re doing the opposite and seizing new opportunities. See if changing competitor and customer behaviour can provide your business with new opportunities.
Re-think your financial KPIs. When creating sales and marketing strategies, you may want to focus on new KPIs (Key Performance Indicators). For example, instead of long-term benchmarks, you might want to focus on KPIs that are centred around immediate revenue. If you’re more focused on immediate profits than nurturing long-term relationships, you can look at reducing CPL (Cost Per Lead) or CPC (Cost Per Click.
Consider outsourcing. Are you already outsourcing some operations? Could you be? Outsourcing isn’t for every function, or even every business, as it can sometimes create more problems than solutions. But outsourcing certain non-core activities could help eliminate business expenses and unburden the workforce. On the flip side, if you’re already outsourcing things like book-keeping, you may be able to reduce costs by automating these functions instead.
It’s important to remember that eliminating business expenses only makes sense if it benefits your organisation. For example, reducing your marketing budget may negatively impact your engagement, sales and relationship-building. And if lowering costs leads to lower quality, your reputation may suffer. These consequences could outweigh the benefits of cutting costs.
On the other hand, if you can reduce expenses while maintaining the same level of sales and customer-centricity, you’ll be well positioned to thrive in challenging economic times.
To see more about how you can help your business reach its full potential, check out our guide, Unlock the Superpowers of Your CRM.