Operating costs are those required for the day-to-day maintenance and administration of your business.If you are seeing plenty of sales coming through but your actual revenue is only enough to keep the business going, you’re going to want to improve the profitability of your business and do it very quickly.A natural solution is to lower the operating costs without compromising your business integrity or your employees.
Below are six ideas that can help you reduce the operating costs of your business and enable you to reduce overhead and generate more revenue.
- Let Technology Pull Some of the Weight
Technology has advanced enough to help businesses get more work done at lower costs. So leveraging the latest technology will help you lower your operating costs.Invest in tools that can automate many of the processes that you are currently carrying out manually, including accounting, website hosting, marketing communications, payroll, and more.
Automating these functions will free up time for your staff to work on more complex tasks that require human involvement, increasing productivity and efficiency, therefore improving cost savings for your business.
Some ideas include using chatbots to manage some of your basic customer support enquiries to help reduce the number of calls and emails you get, and you could invest in email marketing software that will automatically follow up on leads or constantly nurture leads on your behalf.
To choose the right program or service for you, ask yourself the following questions:
- What do I know how to do well? (e.g., If you have an accounting background, you may want to consider using tech for marketing instead of finance.)
- What do I find myself spending an excessive amount of time on every week?
- If I could take one of my most time-consuming tasks off my plate, what would it be?
Hopefully, your answers to these questions will give you a clear indication of the task or subject matter area where you should use technology.
When you are a start-up or small business, having full-time staff on the payroll can be expensive. Recognise the areas where you have pain points or an area of weakness and rather than looking to hire someone fulltime, see if it is something you can outsource or hire a freelancer for. We go into more detail as to the benefits of outsourcing here. You can generally find someone for any area of your business these days. Key areas that businesses look at outsourcing include accounting, IT services, HR and marketing. So if you aren’t in a position to hire someone or a department, for that matter, you have plenty of options externally and you can manage the terms of the agreement far easier than you can an employee contract. Needless to say, you’ll need full-time workers eventually, but there’s no reason to increase expenses, while your business is still in its development phase.
- Home / Office Balance
We’re in an interesting time right now with most businesses having to transition their whole work force into a work from home operation. This may shine a light on the necessity (or lack of) needing office space where you pay a lease, utility costs as well as office equipment fitout. This period of time during COVID-19 highlights just how easy it is to transition your whole team to WFH. Whilst there are benefits to having a common space for your team get together, it may be that you lease an area of a share-office or you could look at smaller premises on the likelihood of not having all your team in the office all the time. Employees will typically also find this advantageous, as they can cut down on their own commute times and expenses
- Audit Your Services
We’re all guilty of this… subscribing to services, forgetting all about them and also forgetting about the monthly payment coming out of your credit card or bank account. Make a habit of going through all company’s costs from the last six monthsand identify services that you’re no longer using. If you haven’t used them in a couple months, look for a cheaper plan or consider cancelling them altogether. If you’re not using them, then they’re not improving your operating income and if you’re still not sure, cancel it and see if you miss it – you can always go back if you need to.
- Be Smarter with Marketing
Marketing is critical for every business but some businesses may be relying on expensive marketing tactics that have extremely an high cost per action. Often what works really well for one business might not for another, so you need to execute frequent testing of all channels to narrow down to the most effective options. You also don’t need to be everywhere and on every channel. If you can identify the main channels where your particular audience / demographic is then focus heavily there. And believe it or not… they’re not ‘everywhere’. You can get really specific in your targeting through the various online channels. Traditional marketing methods are becoming quite effective again, but they require a bit of production investment. Whereas email marketing and social media can cost next to nothing and are even free in some cases if you know how to handle these channels properly. Social media, for instance, allows you to market your business organically by interacting with your audience and by sharing relevant content. You can also leverage paid ads if you want to, but it’s not mandatory to produce the results you’re looking for. Testing these channels doesn’t have to be expensive but it is recommended that, if you can’t hire the experts, that you look at outsourcing or a freelancer to help you execute it right.
- Check those overhead costs
While overhead costs are not to be mistaken for operating costs, lowering your overheads can assist with lowering your operating costs in the long run. Whenever you can improve your cash flow, you are ensuring your business can continue to operate. Overheads costs are things like expenses, taxes, bills, maintenance, advertising fees, accounting, legal, phone, travel, and so on. Reducing these costs will help improve your overall financial situation. Some of the tips listed above will go some way to helping with lowering these costs. Outsourcing and encouraging staff to work from home, reviewing and testing your marketing to ensure you are keeping those costs low. Additionally, pay your bills on time to avoid late fees and additional charges.
Creating discipline and employee buy in to lower operating costs need discipline can take some time to get used to, but you will become comfortable with it when you realize how important it is for your business. It is important that you don’t take it so far that you become afraid to spend money on employees and the services you really need, but take the time to consider the long-term impact of ongoing expensive technology or services.
About AccSource: When your business is growing, one of the biggest challenges you face is to deliver consistent quality, productivity and customer delight. Outsourcing allows you to efficiently tackle your concerns on efficiency and timeliness. AccSource offers accounting, compliance, operations and administrative services to accounting practitioners and businesses to facilitate organisational growth. Through a range of accounting and business process solutions, we undertake both simple and complex tasks such as accounts receivable and payable, payroll processing, financial statement preparations and tax records. Register for a free trial.
Boobalan Madhavan | AccSource | www.accsource.com.au
48/237 Miller Street,
+ 61 406 727061