Always looking for ways to reduce business costs is the smartest decision a business owner can make.
You need to focus on it as much as you focus on your business profits, if not more. Even if your business makes exceptional sales during a particular time period, it won’t qualify as profit if all of it goes in covering your business operational costs. This is precisely the reason you must adopt techniques that cut down business costs before you plan on making big numbers.
The best business cost reduction techniques
More often than not, the key to cutting down costs is right in front of us – we just need to look a little more closely. When working on cost reduction, all aspects of your business should be taken into consideration. With this in mind, let’s explore five ways to reduce business costs to save your company money.
1. Office space or virtual office?
As soon as you think of setting up your business, one of the first expenses that comes to mind is your office space. Though you might be tempted to rent or lease a large, luxurious space, you don’t always need one.
For starters, buying or renting large spaces comes with a huge cost. Don't make the mistake of thinking that you’ll have no further expenses once you buy the space. Maintenance costs are huge.
So, what's the best way to go in this case? First, identify your needs. When you’re starting out, you won't need a huge workspace. You can always expand later on. Plus, with remote work on the rise, you don't necessarily need all your employees to work in the same office.
On that note, if most of your work can be done remotely, do you even need a physical office space? Adopt a virtual office and build your business. This way, you’ll save on a cost where businesses tend to spend the most. In the case of virtual offices, meetings can be held in different venues or co-working spaces, and all of your other business needs such as VoIP video phones, mailing address, receptionists, and so on, are taken care of by virtual office providers at a much lesser cost.
2. Automation is the way to go
If you’re not leveraging the various software and apps, for your business processes, what are you even doing? When looking for cutting down business costs, know that the salary you pay to your employees adds up to the cost, too. And you should only want to spend those funds on the work that actually needs a human force.
Much of the business work such as data entry, payroll management, invoicing, HR, and some aspects of marketing can be partially or fully automated. And for that, outsourcing app development is always cheaper than having a dedicated in-house team. You can save a lot by not hiring dedicated employees for the same. Automation requires much less cost compared to hiring full-time employees. The degree and areas of automation depend on the products/services you have in store.
Automating your business process also lets your employees focus on more pressing business problems rather than doing repetitive tasks. This enhances their productivity and overall business efficiency. Additionally, enhanced productivity leads to high cost-reduction.
3. Be open to outsourcing and hiring freelancers
If you had the choice to get the same business processes done at a fraction of the cost than you have now, wouldn't you take it? Outsourcing gives you that flexibility. Outsourcing is all about hiring people (read: experts) or agencies for tasks that are important but are not needed all the time.
There’s no limit to what business processes you can outsource. Say you’re an e-commerce business. HR activities such as hiring potential candidates or payroll management do not contribute directly to your business profits. You can thus outsource these activities via recruiting automation software and instead focus entirely on your business process.
In case you do not outsource your HR activities, you’ll have to hire full-time employees and pay them for the entire year and give the added benefits such as sick leave, vacations, training, and so on. You’ll have to pay them even if you don't need them all the time. So it's imperative to understand that you don't need an elaborate HR, marketing, or an IT team for your business to function efficiently. You can simply outsource the processes to get work done at a lower overhead cost.
The best part about outsourcing business tasks to agencies or freelancers is that you begin to save costs from the beginning. They are already experts in their field and don't need to be trained. You save costs by paying them exactly for the work done without giving any added benefits or perks. If you’re a startup, this is even more important for you. Don't add to your costs by hiring entire teams for different business functions.
4. Online marketing
If you intend to position your brand in the minds of your target audience, the first step is to be where they are. It wouldn’t be an exaggeration to say that traditional marketing has become second to digital marketing. Traditional marketing has its charms, but when it comes to cost-effective ways of marketing, digital marketing tops the charts.
If your brand isn't already online and you're still relying on traditional marketing, you’re not only adding to your expenses, but also losing tons of opportunities and profit potential.
Online marketing is not only much cheaper than traditional marketing, but it also brings much faster results. The best part? You can analyze the results of the costs you put in. So promote your business online and leverage social media platforms for slashing your costs and maximizing your profits.
Some of the most cost-effective tools to implement digital marketing are email marketing, blogging, micro-influencer marketing, video tutorials, and content marketing. Understand that marketing is one of the most essential business function, but also the most expensive. By adopting innovative ways to cut down costs on the marketing front, you can significantly cut down your business cost in the long run.
5. Please your customers with efficient customer service
Brands need to always be on their toes to serve their customers. They need to answer queries and attend them at the right time and in the right manner. Now doing this can incur a huge cost.
How? Well, serving your customers 24/7 means you’ll need to hire full-time employees as well as operational settings such as internet, electricity, software, phone service, and more just to be "accessible" all times of day. Imagine the cost of this kind of arrangement!
But there’s a better and cost-effective way out. Instead of maintaining such expensive customer service arrangements, you can rely on chatbots.
Chatbots will always be present on behalf of your business and attend to your customers' needs at all times of day. They will not only lessen the burden of customer service tasks, but also efficiently answer repetitive and simple questions.
Customers will feel connected and valued all the time by having chatbots as a point of customer service interaction. Chatbot technology will enhance the overall customer experience and cause a significant reduction in business costs. Since bots deliver human-like service, you shouldn't worry about the quality of your customer experience.
The major goal for any business is to maximize profits while keeping costs in check. With changing times, there are multiple possibilities at your disposal to reduce business costs. For instance, if you want to integrate mobile technology in your business, knowing to reduce app development costs can tremendously help your startup or enterprise.
With the aforementioned techniques, you’re sure to cut down costs and take your business to a whole new level. Always know that the first step to adopting a reduced cost approach is to identify your business needs and purpose. Only then can you decide which of these ways will work best for you.
Sourodip Biswas works with an expert team of web and mobile app developers at Space-O Canada, a software and website development company. He believes that ‘learning is a treasure that will follow its owner everywhere,’ so he always keeps an open mind and tries to learn new things.