Tips for Cutting Costs without Sacrificing Quality
Many small businesses find themselves walking the precarious line between cutting costs and changing their core offering. It’s a risk/reward scenario that can be challenging to navigate. One the one hand, lower costs mean higher margins. On the other hand, the risk of creating a subpar product means the potential for lost business over time.
Fortunately, there are many ways you can improve your bottom line without putting your legacy at risk. Here are some tips for cutting costs without sacrificing quality.
Conduct an Internal Audit
Business owners tend to shy away when they hear the word audit. However, conducting an internal audit on yourself is a fantastic way to understand your business better. An internal audit can consist of reviewing numbers and discussing challenges and opportunities with employees.
Take a deep dive into your numbers and understand where the money goes by line item. Don’t forget to account for interest on debts that could be eliminated through better financial planning. If you run a solo operation, ask yourself some analytical questions regarding what could be done better, what’s truly necessary, and where the best opportunities for streamlining lie.
There’s no reason for a modern business to use paper. Cutting back on printing not only reduces supply costs but also makes your business more productive. This cost-saving effort is more important now than ever, thanks to the global pandemic and paradigm shift toward remote work.
Invest in cloud storage and use cloud-based tools to streamline communications. If you have important contracts that require signatures, invest in a third-party program that allows digital signing. Take the time to put together an easy-to-navigate online filing system that your team can access from anywhere.
Shop Around and Negotiate
Whether you’re looking for jewelry supplies or engine parts, there’s always room for improvement on pricing. Shop around to find the best deal on high-quality supplies and know the difference between being frugal and being cheap.
Keep in mind that everything is negotiable. Your supplier may not be willing to go lower on costs, but they could offer discounts for early payments or bulk shipping. Nourish your supplier relationships to find indirect routes toward savings.
Encourage UGC and WoM Marketing
While marketing is an important aspect of any business, there’s no need to reinvent the wheel. Put strategies in place to encourage user-generated content (UGC) and word-of-mouth (WoM) marketing. You can work directly with customers or create a cross-promotion strategy with other businesses.
Consider implementing a referral or affiliate program to encourage your customers to do the heavy lifting for you. This approach will help you cut back on advertising and scale your expenses based on sales results.
Outsource and Automate
Stop trying to handle every task yourself out of fear of spending more money. While it might seem counterproductive, outsourcing to a contractor or virtual assistant can save you money in the long run.
Having a specialist focus on repetitive or low-value tasks can free up more time to focus on revenue-generating activities. Furthermore, outsourcing to a contractor helps you save on costs associated with employment and lets you hire out on an as-needed basis.
It’s also worth evaluating what tasks you can automate to free up more time. Scheduling social media and email marketing funnels are just a few opportunities for automation that will pay for itself.
Barter and Trade
Many business owners overlook the opportunity to barter and trade goods or services rather than dealing with currency. The benefits to this approach are two-fold: not only will you be cutting back on expenses, but you’ll also be cutting back on taxes.
Consider which expenses could potentially be bartered for. This is a fantastic approach to take when looking for one-off jobs and considering outsourcing.
With these simple shifts, you can cut your business expenses without running the risk of reducing the quality of your offering.