Cost management for small businesses and contractors is vital, but knowing where to cut down without negatively affecting the quality of your products/services or the efficiency of your business is not particularly easy.
Here are six simple ways to improve your profit margins by cutting down costs.
1. Office costs
Examine ways to reduce wastage: switch off lights and equipment when not in use, cancel any unnecessary subscriptions and services and look for ways to cut costs on supplies.
Even a small saving on stationery and other supplies can add up to a substantial amount every year.
Buying in bulk – whether coffee and sugar or post-it notes – can also add to your savings.
2. Office space
Are you utilising all the space you’re paying for? If not, you might want to consider downscaling or sub-letting part of the premises. If you rent expensive office space, but don’t ever see clients there, you may want to consider renting elsewhere.
Review each function within the company and decide if they require full-time employees; roles can be outsourced or performed part-time. If an employee leaves the company, first review the role and see if the work can be split between other employees.
Use freelancers where possible to avoid the overheads. You can also look at arrangements where staff work less hours for less pay, but have more time to pursue their own part-time business interests.
Instead of traveling to every meeting or briefing, consider using Skype and other virtual platforms in order to save on costs. A study carried out by Ashridge Business School, Zipcar and StartUp Britain showed that vehicles owned by small businesses sit idle 63% of the week.
This waste could also be avoided with a share scheme, whereby two or more vehicles are shared between businesses.
5. Trade exchanges
One way to avoid unnecessary cash outlays is to have trade exchanges that are relevant and mutually beneficial. For instance, you could give IT support to a supplier in exchange for free products or a substantial discount.
6. Efficient accounting
The added support of good accounting services will ensure that your books are balanced, that you don’t overpay on tax and that you never lose money paying late filing penalties.