Apply these 13 cost-cutting-busters as you prepare your 2013 budget. Applying simple tactics will help your business remain profitable.
“Economy does not lie in sparing money, but in spending it wisely.”
– Thomas Huxley (1825-1895) English Biologist
- Establish a budget– Before you decide where you can afford to cut costs, you must have control over your costs. A budget helps you analyze expenses and income, as well as forecasting financial variances.
- Develop and implement systems for everything you do in your firm– Implementing workflow processes increase efficiency which will in turn have a positive impact on your bottom line. Many firms tend to overlook their operational systems and workflows especially during a good economy. Review your firm’s operational systems regularly and recognize the static processes. Just because “that is the way it’s always been done,” doesn’t mean there is not a more efficient process. Be flexible to change. This is imperative to reducing your operational costs and remaining viable amid the rising costs of operation.
- Turn off office equipment when not in use– Sometimes the simplest things can be things we overlook. Turn off all office equipment and lights when not in use. If your equipment is plugged into a power strip, make sure the power strip can be turned off or is on an automatic timer.
- Use social media to advertise – Still not on the social media bandwagon? Social media provides you with an avenue for fast-paced, high-results and low-cost marketing.
- Align the responsibilities of your staff members to their specific needs– Review workflow for areas that need improvement or display a lack of clarity. Making revisions in a workflow and ensuring that there are no duplicate efforts or wasted energy will prevent you from superfluous costs. Besides cost savings, you benefit from a significant increase in productivity.
- Invest in more training– It may sound ironic to invest more money while trying to reduce costs, however, investing more in your employees shows them that they are valued. There is an endless source of training models available online, which in-turn will also reduce your travel expenses. Employees who feel valued, are more engaged and more productive at work. SHRM, the Society for Human Resource Management, estimated that it costs $3,500.00 to replace one $8.00 per hour employee when all costs — recruiting, interviewing, hiring, training, reduced productivity, et cetera, were considered.
- Build strategic alliances– In our blog “Strategic Alliances Build A Strong Foundation For Long Term Success” we talked about how building strategic alliances positions your firm to stand apart from the competition. Share expenses with your alliances by implementing joint advertising/media promotions, shared mailing lists and shared educational workshop expenses. You will reduce your costs and improve your bottom line by meeting client needs.
- Outsource– Review the organizational structure of your firm. Pinpoint which roles could be outsourced, such as payroll, HR or mailings. Outsourcing will give you more time to focus on building your business.
- Go paperless– Consider converting to an electronic paperless system when possible and utilizing email for a portion of your communication efforts.
- Capitalize on technology– Take advantage of the cost savings offered through the use of technology. From telecommuting to teleconference services operational costs can be reduced.
- Buy in bulk– Negotiate for a better price if you purchase in bulk or agree to purchase all of your supplies from one vendor.
- Consider contract and virtual employees– Consider housing some of your staff “in the cloud”. Also consider contract employees. Hire contract employees for special projects or ongoing tasks or when in need of specialized skills. The 2011 Employment Review from Elance shows that despite a stagnant employment market in 2011, online hiring has grown at a record pace, up more than 100% from 2010. For your firm you can expect reduced turnover, employee engagement and fewer workplace complaints.
- Find Cheaper Space– Renegotiate better terms on your current lease now that real estate markets in many areas are leaning in the tenants’ favor.
Reducing your operating costs without sacrificing the team’s operational effectiveness, the quality of service and the value you provide to your clients, will go a long way toward improving your bottom line.
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