Top Cost Saving Trends For Businesses
We all know it takes money to make money. But, not every dollar you spend will lead to increased revenue. In fact, many businesses unknowingly make expenditures that stunt their growth rather than drive it. Everyone has them. It’s just a matter of finding out which ones help increase growth and which don’t.
Spotting ways to save isn’t usually a problem for most companies. However, finding savings that benefit your company and don’t compromise quality can be tricky. Effective cost saving strategies aim to increase long-term value while decreasing costs.
Most successful companies are strategic spenders and savers. They spend and save for specific reasons, expecting specific results. Take roofing contractor Joe for example. He doesn’t spend $35,000 on a new pick-up truck for it to sit unused in the parking lot day after day. Instead, it is used to promote his business (with his company’s name professionally attached on the exterior), while speeding up production and improving efficiency between work sites. As a result, Joe enhances the value of his business and sees a big return with increased revenue and profits.
Are you a strategic spender and saver? Here are some of the top cost saving trends that successful businesses use today. Learn what you can do to get the biggest bang for your buck.
1. Limit distractions.
Distractions are a normal part of any work day. However, too many can lead to a 40% decrease in productivity and an increase in costly workplace mistakes. One study estimated that distractions cost U.S. businesses $588 billion a year. With each distraction, it takes the average person a few minutes to regain focus on the initial task. Just think of all that work that goes unfinished with constant interruptions. Although it may not be possible to eliminate all distractions, many companies have implemented strict policies to try to minimize them, such as scheduled internet breaks and fewer meetings. Others commit to working on a single task for at least 20 minutes before moving onto the next.
2. Buy used equipment.
Since most office furniture and equipment decreases in value over time, it may be beneficial to buy used and save the extra money. We all like new stuff, but before you purchase brand new couches for the lobby, ask yourself, can I find the same quality and value for something preowned? After all, by buying used, you could save up to 60 percent.
For cost saving deals, check out online auctions (eBay), newspaper classifieds, and “going out of business” liquidation sales. You can also contact local manufacturers or suppliers to see if they offer refurbished furniture and equipment. These items, usually returned for minor issues and fixed to be like new, are resold at “used” prices.
3. Outsource your workload.
Hiring independent contractors can be a huge cost benefit to your business. You won’t have the extra expenses associated with hiring full-time employees (sick pay, vacation pay, health insurance, etc), and any money paid through outsourcing could be tax deductible (check with your CPA). Many businesses outsource redundant, yet necessary, tasks that don’t require full-time help (housekeeping, landscaping, answering phones). It’s also cost effective to hire a freelance professional, instead of a full-time employee, to handle projects that are on an as needed basis (writing, advertising, maintenance).
If you’re looking for freelance professionals, check out oDesk and Elance. These online resources will help you find a suitable and skilled professional in a variety of job functions including, web development, customer service, administrative support, and networking.
4. Barter with other businesses.
You can save bundles by trading goods and services with other businesses. It’s a great way to unload slow-moving inventory and get what you need without having to spend a dime. If you’d rather not bargain with businesses directly, use a barter broker or join a commercial barter club to help with the exchanges. The National Association of Trade Exchanges (NATE) is a nationwide clearinghouse that allows business owners to trade just about anything with anyone.
5. Use technology to streamline work.
Using technology to streamline administrative processes and automate routine job functions can significantly reduce labor and material costs. For a list of free software products, visit download.com. You can also use a cloud service instead of paying an IT consultant to manage your data. It’s a lot more affordable and is a secure way to automatically back up your data.
6. Review your suppliers.
You might be able to leverage a better deal with your suppliers if you’ve been using them for several years. Most would be willing to negotiate a lower price rather than lose you as a customer. It’s also beneficial to seek at least three bids on everything, even things like paper and pens. Costs add up quickly, so shopping around for bargains could trim several hundred dollars off your monthly operating costs.
7. Keep your customers happy.
It costs businesses 5 to 10 times more to attract new customers than it does to sell to existing ones (Inc). Instead of spending thousands of dollars on costly marketing campaigns, spend less money and focus more time on nurturing the relationships you have with your current customers. After all, they spend 67% more than your new ones and will even bring their friends along for the ride (Hubspot). Happy customers are lucrative customers and the best and cheapest form of marketing out there (word of mouth). So be kind to your customers, and they’ll be kind to you!
8. Go paperless.
Costs add up quickly when you use printed materials regularly. Instead of spending a fortune on printing materials, (printers, copiers, ink, paper, packaging, and stamps) try going paperless. Use a digital invoice and bill payment system and send out customer communication through email rather than traditional mail. Your messages will get to them within seconds rather than the traditional snail mail approach of 2 to 10 days. With email, you can also send out newsletters and other forms of content to a large volume of customers without spending a fortune on mailing materials. Last but not least, use a cloud service to back up and save your files. It will save you the headache and costs associated with printing, filing, and storing your important documents.
9. Shop around for credit cards.
Just like you do for personal credit cards, you should always comparison shop for your business credit card to find one that best suits your business needs. For example, if you usually have unpaid balances each month, find a card with a low interest rate. If you pay in full, look for ones with no annual fee and have a longer grace period. For a list of the top preferred credit cards by businesses, visit nextadvisor.com. Many of these cards offer rewards and cash back, expense management tools, and other card-member incentives.
10. Promote a healthy workplace.
Having a healthier workplace can save your company a bundle. Many businesses are implementing medical screenings, fitness programs, and weight-loss plans to combat low productivity and high insurances costs. These company-wide programs encourage everyone, even managers, to get involved. Progress is tracked and incentives are offered for those who reach their goals. The best thing businesses can do when offering these programs is make them convenient and accessible. For example, have a gym at the office or offer reimbursements for gym memberships.
Start Saving Today
Why wait for the New Year when you can start saving big now. You can start being a strategic spender and saver just by identifying those expenses your business can live without. Remember, it’s not about getting the cheapest deal. It’s about getting the most for your money while enhancing the value and quality of your business.