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One of the most challenging tasks associated with running a business is navigating how to best reduce operating costs. While eliminating unnecessary spend is one of the most effective ways to increase profitability, the challenge remains in determining which costs to choose. While re-allocating budgets may boost cashflow in the short-term, failing to prioritize how they’ll impact the quality of your business can lead to long-lasting damaging effects. So, when evaluating how to best reduce overhead, start by determining which of your current costs add value to your business. From workflow automation tools to marketing spend, there are a variety of factors to consider when looking to cut costs without compromising the quality of your business.
Streamline software services by re-evaluating current tools
Automatic payments make it easy to forget about reoccurring subscriptions deducted from your account each month. So, when looking to cut costs, one of the first things you can do is analyze your bank statement for any unnecessary charges.
Once you've identified which platforms to eliminate and which ones to keep using, the next step is determining whether or not you're utilizing them to their full capabilities. It's not uncommon for companies to enlist five or six SaaS services just to discover they're only using 20% of the available features. If you're currently paying for multiple services, perform a deep dive by scheduling a time for client services to run through available offerings. This will help you discover if you're team is properly using each tool, and whether or not its cost-effective to consolidate current subscriptions.
Keep in mind that ongoing product development is the result of a highly competitive B2B software market. Use this to your advantage by keeping up to date with current tools that may be introducing new features or product launches that can replace other services you're currently paying for.
Negotiate with suppliers
Reducing supplier costs can help to significantly reduce overhead. However, some business owners are unsure of how to initiate these conversations. Keep in mind that suppliers may be more receptive than you expect when it comes to offering discounts, especially if it's with customers who they've established relationships with overtime. Even if you're a new customer, reinforcing the prospect of a long-term relationship may help to secure lower rates, especially if you agree to a larger initial payment. Most importantly, be transparent by clearly communicating the pricing you're looking to achieve and how it can be mutually beneficial for each party.
Optimize marketing with performance-driven initiatives
While many businesses rely on marketing to boost performance, not all initiatives guarantee results. With the rapidly growing number of channels to deliver messaging across, many owners exceed budget on poorly executed initiatives. Not every medium is relevant to your brand, which is why a clearly defined strategy is crucial in helping to ensure your efforts are effective. An even worse way to waste money on marketing is by failing to align campaigns with any measurable goals. Sure, an ad-hoc initiative might be effective every now and then, but when you're looking to cut costs, being strategic is paramount to your success.
Instead, optimize spend by supporting initiatives with a clearly defined set of KPIs that you can measure results against. Rather than exceed spend on underperforming initiatives, eliminate any marketing that isn't geared towards conversion. Instead, shift efforts to boost visibility through organic channels and prioritize conversion on any paid marketing. Eliminating any non-performance driven campaigns will not only help to reduce overhead but will also return measurable insights that you can leverage for future initiatives.
Leverage the cloud
Rather than pay for physical storage devices, reduce costs by transitioning to a cloud-sharing software that employees can securely access from their home or office. Store and retrieve information and other important data without having to rely on a physical server that's susceptible to damage or relative security breaches. Reorganizing your IT infrastructure can be especially useful for companies shifting to a more remote environment, even further reducing costs by eliminating the need for a physical workspace.
Get creative
By implementing these simple yet effective solutions to help reduce costs, you can increase profitability and boost your business's growth momentum. As a business owner, it's important to embrace the ever-changing landscape that welcomes new technology, practices and opportunities for success. Adjusting budgets doesn't require you sacrifice the quality of your operations; but rather it encourages owners to leverage the instinct and innovation necessary to truly see your business thrive.
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