Tips for a More Cost-Efficient 2018For small business owners, saving money is a great way to start a new year.
As a small business owner, you can’t afford to waste a dime. Yet you may be spending more money than you need to on business operations.
Start the new year by taking a few steps to cut costs and improve efficiency. Here are six places to save.
Utilities. Look to see how you could save on lighting, heating, water and other utilities, said Andrew Jensen, a business growth, efficiency and marketing consultant.
“Not only may there be room to negotiate the contracts for electricity and natural gas, but there may be opportunities to reduce consumption as well.” Can you turn off more lights when the business is closed? Lower the thermostat more at night?
“During the day, experiment with setting the thermostat with a one degree change,” said Jensen. Most employees won’t notice the difference, but the energy savings can add up.
Maintenance costs. Evaluate everything from the cost of paper towels to soap in the employee washroom, said Jensen. The list of maintenance costs also includes services such lawn care, snow removal and trash pickup. Jensen recommended contacting local trash pickup companies to see if you can save there.
Your data plan. It’s normal for telecommunications costs to creep up fast for businesses, so assess if your business is using all the data you’re paying for.
“Contact your current carrier and ask them for ways you might be able to save money. Certain carriers are great about helping small businesses who ask for ways to save,” said Jensen. You may be able to cut back on landline extras if your business relies mostly on cell phones, for example.
Also, said Jensen, “Consider transitioning to VOIP [Voice over Internet Protocol] phones. You may want to consolidate your landline phones and internet services into a single package if there is a cost savings there.”
Your supply chain. The end of a year presents the opportunity to renegotiate, said Thatcher Spring, founder and CEO GearLaunch, which provides software tools for ecommerce companies. A supply chain review should include everyone you do business with, he noted.
“Many SMBs are still new to the supply chain and don’t know which levers to pull to reduce shipping and manufacturing costs,” Spring said. Levers that can lower your price include higher volumes and longer terms.
If you have multiple suppliers, leverage them against one another on price to get the best deals, Spring advised. “This is where it helps to do research and talk to industry peers to get a sense of what terms others are getting.”
Inventory. “Money tied up in unnecessary inventory is a sunk cost and could better be spent on marketing for your business,” said Spring. The end of the year presents a good time to clean out and clean up. Use an inventory app for maximum efficiency.
Damage and theft. Employee theft and customer theft both cost you money, as does product damage. “Don’t position high value items near exits or areas out of sight,” said Jensen. “Reward employees, either through public recognition or through store credit, for months when damage/theft is kept low. Employees will be encouraged to stay more alert for shoplifting and may be less inclined to steal product themselves.”
Staff downtime. “The vast majority of workers would rather be busy than idle,” said Diane Helbig, a business and leadership development coach and founder of SeizeThisDay, a business growth advisory firm. “So work with them to identify tasks they are expected to engage in once they have completed their work.”
Helbig recommended setting up a training program that cross-trains employees. “This provides flexibility and coverage regardless of absences. That can improve productivity dramatically.”
To find more ways to save money or time (which equals money), Helbig suggested holding an efficiency brainstorm. Your staff and any outside advisors (such as your financial advisor) can prove valuable in identifying potential savings and ways to boost efficiency. Plus, said Helbig, “When you ask everyone what ideas they have for reducing costs, they have buy-in and will work with you.”