What are your plans for improving the bottom line for your business this year?
While finding ways to grow your revenue should be at the forefront of your planning, taking a look at how you can streamline your expenses can also have a direct impact on that bottom line.
You generally want to have an “increase revenue” mentality rather than a “reduce expenses” strategy for your business, but recent economic conditions have made that a challenge for business owners. Sometimes when times are good, we can get sloppy with your expenses, now is a good time to evaluate your business and look for opportunities to save without sacrificing quality.
Below are 5 things you can review in your business that can put more money into that bottom line, where us businesses owners have to live and survive.
Reduce your operating hours
If your business allows for it, and does not need to be open for set hours, consider reducing your operating hours, or even closing for an entire day. One client of mine, an upholstery cleaning business, decided to close on Fridays to reduce payroll hours and operating expenses. We chose Friday as that was his slowest day of the week. He was able to shave off over $900 a month in expenses and it had no effect on his revenue as almost every customer was happy to schedule for a different day. He was also able to free up a day where he could work on strategic planning for his business instead of servicing customers all day.
Do you lease/own a physical space? You pay rent on that space regardless of how many hours you’re operating each month. If your business allows for it, why not see if there is opportunity in sharing your facility with another business. A hair salon I know leases a room in the back of their salon to a woman who offers relaxation massages. She was previously working out of her home because leasing a space by herself proved to be too expensive. If you lease office space, why not see if you can find another business to occupy your office when you’re not there. Startups with young entrepreneurs and businesses that deal with overseas customers usually do not operate in the normal 9-5 realm, maybe you can offer them your space after hours.
Review your suppliers
You may have had suppliers for several years, maybe the same ones since you opened your business. Maybe it’s a good time to look at your purchase history and see if there are better alternatives or opportunities to work out a better deal. If you’re a good customer, they won’t want to lose you. If you’re not able to get better terms, then maybe it’s time to look for other suppliers. Last year I reviewed my business insurance policy after being with the same company for the past 5 years. By showing my current insurance company 4 quotes I received, I was able to reduce my monthly premiums by almost $200 a month, by doing about 60 minutes of work on my end.
Instead of pay raises, look for value adds for your employees
If you’re not in a position to hand out raises for your employees, but are concerned about losing key talent, try looking at value add opportunities for them. Despite what you may think, it’s not always about the money. Things like flexible work hours, more opportunities to contribute, and greater autonomy can lead to greater employee satisfaction that will keep them sticking around even though you can’t offer more money. Pay them fairly and create an atmosphere people love to work in.
Cut your administrative costs
Take a look at your current processes, are there opportunities to streamline or remove processes that are costing you time and money? I worked with a real estate agency that was spending almost $2000 a month in printing costs. An endless cycle of printing, faxing (and re-printing again) and document printing were running up office expenses and creating an environmental nightmare. They hired an office organizing professional who helped to streamline the communications with their agents and cut their printing costs in half. They were also able to save about 10 hours a month in filing time as most documents were now stored electronically, being printed only if necessary.
How can you reduce expenses for your business?
All of the suggestions above can help save you money without reducing quality for your customers. What ways will you look to send more money to the bottom line for your business this year?