In times of economic uncertainty, like those that some of us have to navigate just now, trimming the fat and running a lean business can be the difference between survival and success. With a limited appetite for increased service costs, one of the few avenues open to businesses is to review their operational costs and find ways to save on their day-to-day operations.
Shaving £/$ off operating costs can be difficult, and there is rarely a quick way to offset your spending. However, there are some simple tips and tricks that you can follow to help you identify where money can be saved.
Cut Resource Consumption
When it comes to home life, we normally keep a close eye on water or electricity bills. Still, for many businesses, that tends to go out the window when managing their premises. Reviewing your use of resources, particularly electricity, can have a sizeable impact on your monthly and yearly outgoings.
Ensuring that you are powering down computers at the end of the day, installing timers or motion sensors for lights, and implementing simple carbon-efficient policies, will all help to shave money off your bills.
If you are running a small or medium-sized business, moving towards energy efficiency may even open up opportunities to apply for funding to cover the cost of making a move, with a range of green funds and grants available.
Revisit Your Suppliers
It can be convenient to stick with the same suppliers over time, rather than facing the possible disruption of a change. However, you could be spending significantly more than necessary on everything from energy to products or services.
It is beneficial to semi-frequently review all of your suppliers and complete a cost-benefit analysis on remaining with them or making a move. You may find that something as simple as switching your electricity or water supplier is enough to make a dent in those operating costs.
There are many resources out there to help you review your suppliers, from review websites to dedicated services like https://www.castlewater.co.uk/services/business-water/switch.
Finding a balance between outsourcing and hiring internally can be difficult, but outsourcing work where possible can save on unnecessary hiring and employment costs. Outsourcing short term projects or bringing in agencies can help you to save overall, especially when compared to the costs of advertising, hiring and training dedicated staff.
Making effective use of outsourcing can also help your business to become more agile and able to deal appropriately with the changing landscape. For example, when things are tight, ending a short-term outsourcing contract can be much more palatable than looking at redundancies.
Review Your Marketing Approach
Marketing is an essential component of any client or customer-facing operation. Its value to many businesses cannot be overstated. When it comes to cutting costs, marketing can be one of the first areas under review. Still, it can often be counterproductive to stop or cut down heavily on marketing.
It can be far more valuable for businesses to review their marketing approach, analyse the return in value they are seeing and consider other more cost-effective approaches. For example, digital marketing can often be far less cost-intensive than physical or broadcast marketing.
As with all elements of cutting operation costs, this should be a process of trimming off the fat and maintaining your business’s integrity.
Commit to Remote Working
Throughout the pandemic, many businesses and organisations have moved to working remotely, with offices temporarily closing and staff working from home. This has been a great experiment for many businesses to evaluate whether they really need physical offices to conduct their business.
Suppose your business has been able to function through remote working. In that case, this may be a more permanent option to be considered. Moving your staff towards remote working and cutting down office space may significantly reduce your overall operating costs, as you will be paying far less on utilities and running costs.
This doesn’t mean saying goodbye to a physical location completely, though!
If your business would benefit from occasional office working or simply having a physical location for meetings, increasing the volume of remote working may also help cut running costs. This may also open the opportunity to experiment with sharing your workspace with other businesses.
Invest in Staff
Often the process of reducing the operating costs of a business can be heavily focused on cutting elements of the business, but that isn’t the only way to save in the long term. Investing in your staff, offering good wages, regular pay increases, in-house training and opportunities for more responsibilities can all have a significant impact on increasing staff morale and reducing your staff turnaround.
Hiring and onboarding staff can be one of the costliest exercises that a business regularly conducts. By improving staff happiness, satisfaction, and morale, you can help cut how often you are required to replace personnel. Additionally, employee happiness and satisfaction has been directly tied to productivity, so by investing in your staff, you will have a more efficient workforce.
Stay Efficient & Lean
Frequently reviewing your operational efficiency and outgoings is perhaps the most significant way to reduce your overall operating costs, as this will allow you to identify flaws in spending and implement solutions rapidly.
Far too often, the overall picture of outgoings simply goes unnoticed for long periods. This can result in businesses paying for services they no longer use, often due to auto-renewal systems for these services. By frequently reviewing outgoings, you can create a full picture of what your business is spending on and if it is worth the cost.
This review process should be completed regularly to ensure that it is fully up to date with your business’s current circumstances and spending habits. Completing a review and cutting down on operating costs is always beneficial, but its effects will lessen as time goes on and more inefficiencies creep back in.
Are you interested in reading more about cost-cutting measures? Then you’ll want to take a look at the latest articles in our money section, including this article on habits everyone should adopt to save money now we’re a year into the pandemic.