5 big business costs – and how to cut them fast
Looking for smart ways to boost your bottom line without a detrimental impact on your business? Here are five quick and easy solutions
Whether sales are flying or dragging, cutting costs will always help boost your bottom line. Some costs may seem pretty fixed, but smaller businesses can be even more flexible in how they cut overheads than their larger peers.
Here are five of the biggest expenditures for your business and the solutions that could have a dramatic impact on profit margins.
Solution: Outsource to freelancers
Good staff can be the key to start-up success, but hiring the best people full-time might not be possible within your current budget. Don’t worry, as outsourcing to freelancers is an ever more popular business option. It taps into the ‘gig economy’ where more and more workers are choosing to offer their services piecemeal.
Not only can outsourcing turn a fixed cost into variable expenditure and reduce hiring costs, it can also increase efficiency and allow you to launch into new areas quickly, with the help of high-class expertise that’s available on a project-by-project basis.
Services you could outsource within a few clicks of a mouse button range from core functions such as HR and accounting, to sales and marketing, personal assistants, graphic design, content and copy-writing, web development or even a video artist to record or present YouTube films for your next viral campaign.
You can advertise online through jobs pages or bulletin boards, browse ready-made freelance sites such as upwork.com and peopleperhour.com, or specialist databases such as journalism.co.uk and 99designs.com.
Solution: Smart meter
Energy might seem like a difficult cost to trim, while the shock of receiving a surprise electricity bill or making an overpayment can be more than a minor annoyance.
But new technology, in the shape of smart meters, not only allows you near real time information on how much energy you’re using and how much you’re spending, but also regularly sends this data to your supplier so you’ll never be overcharged.
With the Carbon Trust finding that companies waste 20% of the energy they buy, a smart meter – which makes your usage information available via a digital display, or an online portal – could make a real difference to your overheads. It can help you work out whether certain activities are using unnecessary energy, provide a better opportunity to eliminate waste, and, crucially, help you manage your cashflow better.
Smart meters are being rolled out already and businesses with fewer than 10 employees can be eligible, so check with your individual suppliers to see whether you can get one.
Solution: Co-work / shared offices
Another aspect of Britain’s increasingly flexible modern economy is office space. Demand from employers and employees alike is on the rise. Instant Group’s Flexible Workspace Review UK 2016 reported a double-digit growth in occupier enquiries for flexible workspace in 2015-16.
With an ever-expanding range of flexible office and co-working space available in every city and town, start-up businesses no longer need to be tied down to long leases. Most flexible offices will be modern, clean and convenient, with full telephony and internet connectivity. Many also offer receptionist services and even the chance to fit out areas with company branding – so if you’re downsizing to save costs, your company image need not suffer.
And depending on how much you need to save, you can hot-desk or hire a single desk-space, then add or subtract desks month by month as needs change.
Websites such as Hubble provide a marketplace for organisations offering and seeking desk space, while more formal co-workspaces, such as We Work, Co-Work, and Workspace Group, are popping up in an increasing number of locations.
Solution: Cloud computing
Spending on both hardware and software can stack up for businesses large and small. Hardware steadily slows and software can become obsolete, which some entrepreneurs might view as a wasted cost, but it doesn’t have to be that way.
Last year, 70% of UK business that used the cloud did so to reduce infrastructure costs. However, while 84% of UK firms said they use at least one cloud-based service, according to a survey by the Cloud Industry Forum, smaller business were found to be much more reluctant to use this new technology than larger rivals. This is despite the fact it provides a prime opportunity to reduce IT costs, as well as improved range and flexibility of services.
Entrepreneurs of the old school may fear this buzzword-sounding concept – and the prospect of saving important documents in the ether, but you may already unwittingly be using cloud computing for crucial tasks. If, for example, your company email is on Gmail or you save documents in Dropbox, or photos on Flickr, you have already adopted a cloud technology.
Using cloud software will reduce IT installation and administration costs, could eliminate the need for a server in the office, will keep software and security up-to-date, and will ensure data is always backed up.
Solution: Social media / SEO
Marketing usually goes arm in arm with growth, so drawing back on spending in this channel is done with gritted teeth.
However, you need not give up on growth if the potential cost of a big marketing campaign is putting you off. There are ways of managing expense here, while still lassoing new customers.
Online marketing, like search-engine optimisation (SEO) and social media, is undoubtedly the most cost-effective and precise marketing method.
Many sole traders run successful social media accounts, and have built content strategies through blogging or video, or learnt the basics of SEO. There is often zero, or at least much lower, cost in terms of printing or graphic design compared to other forms advertising.
But to reduce the likelihood of costly mistakes or wasted time, it could be best to hire an expert — maybe even outsource to an SEO or social media specialist or agency.