When it comes to improving your business’s profitability you have three choices: Sell more, increase your prices or cut your costs. Put that way, it sounds like a statement of the glaringly obvious, but it is surprising how many businesses focus like mad on the first to while paying very little attention to the third.
Here, we take a look at three areas every business should focus on that will help them get the optimum bangs for every buck.
1. Automate your processes
The technological world moves quickly, and any business with established internal procedures is liable to stand still and be left behind. If you have paper-based processes, they will be slow, costly and prone to error. There are automated IT solutions that can streamline these, making them quicker, cheaper and more accurate.
Many businesses baulk at the cost and upheaval of making the change. Of course it demands an investment of time, but it will pay for itself quicker than you think and ultimately make your business more successful and profitable.
2. Review your suppliers
As with those internal processes, businesses tend to stick with the same suppliers for years on end because it is convenient. An annual review is absolutely essential, both to ensure you are getting the best deal and to focus the minds of those suppliers and make them work to retain your business.
Utilities and insurance should be closely examined every year, but also look at things like basic office supplies. For example, if you procure printer cartridges and toners online from a company like Printer Inks you can save vast sums on every order compared with regular trade prices.
3. Consider outsourcing
One of the biggest fallacies in business is that the most cost-effective way to do something is to do it yourself. Trying to keep everything in-house actually has the opposite effect, draining your financial resources and distracting you from the big picture of driving your business forward.
The rule here is a simple one. If it’s not a task that is core to your business’s knowledge and expertise, then pass it on to someone who knows what they are doing. You wouldn’t send the marketing manager up on the roof to change a leaking gutter as he’s not a builder. So why would you ask him to work on improving SEO or looking after system admin?
When you outsource tasks, whether these might be facilities maintenance, IT support or bookkeeping, you know they are in the hands of people who do this kind of thing for a living, day in and day out. In other words, you have access to the best expertise. Yet at the same time, you are cutting all those additional costs that come with hiring full time employees – and you are only paying for the time you are actually using.
Cut costs and reap the benefits
These three areas don’t just reduce costs and improve profitability. Many of them will also make your business more effective, leading to happier customers and increased sales. There’s really no downside, so explore these cost saving ideas today and start reaping the benefits.