You can make a million dollars every month, but if your expenses are $999,999, you’re still making $1 every month and are not running a successful business. Profit is not just determined by the amount of money that you’re making, but also by the money that you’re spending.
Cutting costs is never an issue. All you need to do is cut down on the quality of raw materials you use for work, cut down on the employee wages, and cut down on your marketing, and before you know it… you’ve ruined your business entirely.
This will produce worse products, destroy your employees’ motivation, and ruin your public image.
So, can you cut business costs and increase your profit without ruining quality? Of course you can; here are eight ways you can achieve this.
1. Embrace AP automation
There are so many ways that AP (accounts payable) automation can help you save money. First of all, it reduces the manual data entry costs. The time that your employees spend on data entry has its cost. With automation, you’re eliminating each of these steps.
Moreover, you’re minimizing the chance that you’ll miss a payment and have to pay a late fee. It also means minimizing the chance of ruining your credit score and reputation with your vendors.
Also, AP automation allows you to pay the expenses optimally. This means not spending before you must and ensuring every penny goes where it has to.
2. Make your own website
Another thing you should look for is affordable ways to build a site rather than spending thousands on a professional web developer.
There are several reasons why, in the past, it was strongly advocated against building your own site. First, there weren’t as many amazing website builder tools, meaning you had to learn how to code; not an easy feat for a busy entrepreneur. Even then, without enough experience, the result wouldn’t be great. In other words, you had to invest too much effort to get a middling result.
With modern website builders, this is no longer the case. First, most of them work on a drag-and-drop principle, meaning they either operate on a low-code or no-code principle.
They’re simple, intuitive, and easy to use. This means you get what you see, so bringing your ideas to life is much easier. Also, once you understand how to make changes to the design when needed, you’ll save a lot of time rather than waiting for someone else to handle maintenance.
3. Analyze your target audience
One of the best ways to save money on marketing is to become better at analyzing your target audience and making all your ads and outreach more targeted. You’ll ensure a higher ROI for every dollar you invest in marketing by identifying qualified leads.
The first thing you need is a good CRM tool. This way, you’ll get a centralized hub for all the customer-related data. This data will be processed, analyzed, and stored to be available on demand. Most importantly, you can integrate this CRM into any tool you choose.
While choosing this software, look into scalability, compatibility with your current tools, and how easy it is to master.
While the cost of CRM adds to your list of expenses, the money you’ll save this way and the ROI improvement you’ll see will be more than worth it.
4. Embrace remote work
One of the simplest ways to save money is to stop paying rent and utilities for your office space. You could also stop buying your employees’ hardware (computers, peripherals, and furniture). Lastly, you can eliminate travel expenses.
Sound too good to be true? You can do all of that by embracing remote work.
Another perk to keep in mind is the fact that you can hire from a global talent pool. This means that you have a chance to hire better employees at a lower cost.
5. Invest in SEO
Generally speaking, SEO (search engine optimization) gives you an incredible ROI for a relatively modest investment. While it might have some upfront costs, SEO saves you money in the long run. People often compare SEO to paid advertising, and while methods like PPC (pay per click) give an immediate boost, in the long run, SEO will generally pay off better, with 70% of marketers feeling it gives better results than PPC.
The thing with paid advertising is that while it gives you an immediate traffic boost, it’s gone as soon as you start paying. With the organic reach you get from SEO, you stand to improve the rank of your enterprise indefinitely, without investing more further down the line.
Also, you get to kill two birds with one stone. The bottom line is that this is not just a visibility boost. It’s also an authority boost. People trust businesses that rank at the top more than lower-ranked businesses. In other words, with a single marketing investment, you get a boost in visibility, reputation, and some trust markers.
6. Cross-train your employees
The costliest affair for a business is downtime, and a vital employee’s departure often causes it. So, how do you avoid it? It’s simple – you cross-train your staff. This way, your employees can fill in for one another.
There’s one more hidden perk. When employees realize you can’t go around them, they understand they have all the leverage. Some definitely won’t abuse this newly discovered power, but you won’t always be as lucky.
This flexibility also gives you scalability in the face of changing events. So, if the workload in one department falls off, you can internally shift your employees and redistribute your workforce.
This can save money by avoiding overstaffing or hiring expensive (specialist) replacements. Cross-training costs are often not as high since you introduce the employees to the task, not the corporate dynamics.
7. Outsource
Sometimes, the cheapest thing to do is just to outsource. Sure, it saves you an astronomical cost of setting up a process internally; however, this is just the tip of the iceberg. Even when compared head-to-head, the costs of outsourcing are often lower.
If you compare the cost of running the service internally, you must be fair and compare a similar service. For your staff, it would take an expensive hiring process, even more expensive equipment, and time (which, as we all know, is a finite resource) to come even close to that level. By outsourcing, you get that service on the platter.
Most importantly, when outsourcing, you’re getting a higher level of scalability. You can just change a payment plan; hiring or firing more people is unnecessary. This sets you up for the future rather nicely.
8. Negotiate with your suppliers
Negotiating with your suppliers is the simplest way to make it seem like you’re making money out of thin air. Just think about it: the negotiation may be long and arduous, but at the end of the day, it’s just asking for a discount and potentially getting it.
You’re getting the same quality of service and the same quantity of resources; there’s no changing your business model, and you get to pay less.
However, it’s not “just” asking. You need to start by building a reputation with the vendor (this is where the AP automation we’ve mentioned earlier comes in as particularly handy). You also have to have the right game plan. How you ask is sometimes just as important as what you ask (even in B2B interactions).
With a bit of strategy and forward-thinking, you can easily cut costs without sacrificing too much
As you can see, there are a lot of instances where you can cut costs or get more for your money. The thing is that you need to be realistic about your budgeting. To save money, you sometimes have to burn money, and there’s no way around it. Just prioritize and try to do your best to get this going.