15 Business Cost Saving Ideas
7th May 2018
It is a good idea to explore ways to reduce business costs, no matter how your business is doing. Successful, well run, businesses should even be looking at ways to make savings as there are several advantages to doing so. It can provide capital to take on new projects, make infrastructure improvements, or initiate business expansions. Knowing how to cut business costs can mean the difference between a stagnant quarter or year or growth.
So let’s just jump straight in with our 15 cost saving ideas for businesses, regardless of industry.
1. Cost Saving on Marketing Strategies
Learn everything you can about marketing and public relations for your industry. This of course goes without saying if you’re attempting to navigate your own marketing strategy but it’ll also help when you converse with PR and marketing companies. You need to know what you want, the various techniques and services out there and ultimately, the ball park figure of what it should cost. By knowing this, you’ll likely save.
Many businesses spend money on marketing efforts that simply don’t produce. By reviewing your marketing strategy every 12 months, you can find places to save money/ better utilise your budget. Start by eliminating marketing efforts that are at least a year old if you cannot document how they have helped your business.
We’re looking forward to seeing the JD Wetherspoon experiment results of removing yourself from social media all together, in the coming months. If you’re the type of business that has foot-fall on your side, can you afford to run your social accounts for the return it brings over and above what your passing trade would bring? And in a similar vein, do you have the name/ brand to be able to do without the effects of social media?
Market to existing customers/ clients too. Make sure you’re complying with the new GDPR rules of course but it costs more money to market to new customers than it does to get repeat business from your existing customer base. If you are maintaining your client relationships, in the way that you should, and getting repeat business from them, you’re already saving money. To add to your savings, ask those current customers to refer people they know to your business.
2. Legacy Contracts and Leases Can Get You Legged Up
We’ll keep this one short and sweet; we’ve seen hundreds (yes, really) of companies paying for equipment and services on both products they no longer own/ lease and also on things that in theory have come to the end of the lease and that they own outright. We’ve also seen businesses paying on service contracts that they no longer have and/or need in operation. We’ve also uncovered examples of contracts covering 24/7 operations that aren’t in operation for 24 hours per day/ 7 days per week.
3. Travel Expenses; Let Me Introduce You to Meeting Expenses
Meetings are often completely necessary to coordinate multiple aspects of a project. However, no work is actually accomplished in a meeting. It is just preparation and planning. Before calling a meeting, decide whether your goal can be achieved by some other means. It might be more cost-effective for you to walk around and get a status update from each member of the team for the report/ analysis you’re compiling. Group emails, video conferencing, Skype, FaceTime, Webex and GoToMeeting style applications also allow you to crack on with the outcome of the conversation, rather than getting back in the car, driving back to the office and losing the impetus in the meantime.
Travel expenses are one place that every business can save money. Even training can be accomplished without leaving the office. There are webinars available on every topic imaginable. If you want to save money, think of alternatives before you or your employees hit the road for another work event.
Sometimes the best thing to do is meet with your client or your team face-to-face, but it’s important to be selective about when these opportunities are worth the spend. Cutting down on travel can save your business money and can make your team more productive at the same time.
4. Sharing is Caring (about your bottom line)
Another option for cutting costs on leasing is to go in on a space with another business. Of course this carries its inherent risks, but this could be a viable option if you’ve got a close business connection, especially if you don’t need a lot of space. If you shared office space with a business you partner with often, it could be more economical and save time too.
But choose the right space; renting office space in an exclusive development may be what’s necessary for your brand/ image/ what you offer your clients but think about some alternatives too. Is location more important or access? Or are the aesthetics of the premises vital for clients and/ or employees?
Buying premises can be a cheaper option, possibly in the long term rather than short, for some and this should always be explored.
If some of your employees worked from home on a rotating schedule, you would not need such a large office. Maybe developing a business model where you went to your customers instead of maintaining a location for them to visit you would be more economical. There are a number of ways you can re-define your office space to be more efficient and save money.
5. Marvel at Going Green Floating your Boat
Is that classed as a pun? Anyway, changing some of your business practices to be more environmentally friendly can save you money. Energy is one of the largest costs many businesses face, so by reducing your energy consumption by even a small percentage, reduce business costs. There are products available to help you cut energy consumption and if you’ve had an ESOS report produced then you could start there. But beware the “take or pay” clause in your energy contracts when coming up with a new energy strategy. Outsourced energy procurement is a great way to minimise risk in this area. For example, are those LEDs in your warehouse really going to save you anything when you predominantly use power through your sockets?
There are also energy courses, that various suppliers run, which you can send employees on. The emphasis is on using less energy, within the business, and resulting in a win-win for your company overheads as well as the environment.
Going paperless can be achieved (admittedly, it can be tricky) by utilising digital documents and by not printing emails for example. Could the use of Tablets by employees work for your company? And when you do need to print, have regularly used forms printed rather than photocopying them, as this can be a less expensive option.
Ink cartridges, paper, filing cabinets and storage space are all expenses you can successfully reduce in the digital age. You can store your documents and data in the cloud. Backing up is essential of course, as is using the right supplier.
6. Events, Collaborations and Sponsorship
There’s a wide range of reasons why a business may want or need to throw an event. However, they can be quite costly so it may be worth you exploring getting together with another business, either as a sponsor or as joint hosts if their products have an association with yours. Collaboration can also mean throwing an event of higher quality, more PR opportunities, more buzz on social media etc. and a greater attendance for all involved.
7. Hire the Right Human and Remunerate Them Wisely
Employees are the largest expense for many businesses. A lot of money is also invested in them before they even make you a penny. Therefore, it’s essential to retain employees long enough to capitalise on that up-front investment you make in hiring and training them in the first place. The easiest way to retaining an employee is by getting the right ones in the first place.
Remunerating them based on their performance will ensure you’re not only keeping the best but also rewarding them on a pro-rata basis and essentially paying out less than what they bring into the business. From salaries, benefits and bonuses to rewards and other perks, the right combination of all of these will mean it’s win-win for all concerned.
A high performing employee is a valuable asset. They make you money so check in with your team and make sure everyone is happy and that their needs are being met. And remember, if the role makes the business money, keep it in-house. For everything else; OUTSOURCE.
8. Know When To Outsource
When you outsource the right services, you can save money in your business. The key is figuring out what things to outsource and what to keep in-house. Many offices, for example, have coffee supplies delivered rather than sending someone to the store to get them on company time. Not only does this save money, it allows employees to focus on their work tasks and not be distracted by “housekeeping” chores. The more time employees spend focused on their core tasks, the more productive they can be.
Consider freelancers or contractors for short-term jobs or social media management etc. You won't have to pay a full-time salary with benefits to employees who you may not need after a project is completed. Plus, if a particular temp worker stands out, you may be able to hire them to fill a current or future position, which could help you cut recruiting and training costs.
A client who doesn’t pay on time can be a huge problem. Ensure that your collections are on time and that outstanding balances are minimised. Consider outsourcing debt recovery and bad debt; you’re able to pass on the costs to the company you’re owed by too.
Procurement outsourcing is already popular for your indirect spend. But procurement outsourcing is also gaining in popularity as a procurement model too and this trend is set to continue. Whilst “Savings” may not be on the agenda for indirect procurement, it’s often the case that because you’re outsourcing/ working with a third party, that has hundreds of companies on their books, savings are inevitable purely because of the buying power of the third party.
9. Be Euphoric About Number Nine – The Cloud
Number 9 is exactly why we keep going on about cost saving being a procurement KPI (and probably always will be) because technology and processes are forever evolving and progressing. Cloud computing is another point with this philosophy at heart.
Most businesses spend a lot of money on software and equipment just to run the business. These costs likely increase year-on-year due to renewing license agreements, updating software and replacing hardware. However, you can switch to the cloud, at a fraction of the cost.
There are applications available in the cloud for every business function and they cost significantly less than the traditional tools of business. You can replace your entire server with cloud computing and data storage and save money on hardware and maintenance. You can gain access from multiple devices and any location. You can reduce overhead costs by allowing employees to work from home or other remote locations.
By utilising virtual servers, from which you can run your normal business applications, can be best described as ‘Infrastructure as a Service’ (IaaS). Your business does not own, manage or maintain any of the underlying hardware. You simply manage your traditional applications but get a fully managed, resilient IT infrastructure service and secure platform design with firewall and VPN connectivity. You only pay for what is used, on a fixed monthly fee (including all server, storage, firewall and network changes) and with 24/7, 365 pro-active monitoring.
Whilst the savings are great, it’ll also allow your IT team to focus on core business issues and not the platform and the solutions can easily be scaled up and down as required to enable business growth.
10. Review Your Operating Costs
The day to day expenditures on simple things such as tea, coffee and supplies all add up. Procurement outsourcing means that you can engage a company to go through things and see where you might be paying more than you need to, saving you a lot for what is essentially a paper exercise and a different way of ordering and processing.
Outsourcing your procurement works even better for more complex areas of spend and making sure everything you’re paying for is market aligned can be more difficult to achieve in-house. For courier and logistics services, business energy, business telecoms communications and IT and business supplies, the saving can be into the thousands (and hundreds of thousands depending on spend). Head over to our procurement case studies to see some examples.
11. Stay on Top of Your Outgoings
When money is tight, things like late fees on bills and invoicing are an additional unnecessary problem; pay your dues on the due date to avoid charges or collection fees. It seems like a no-brainer but many businesses get into the bad habit of stretching their agreed payment terms with a company. Why increase what you owe by going down this route? Pay on time and pay by Direct Debit.
Many suppliers offer discounts for paying invoices within the first few days of receiving them. If you have the cash flow, paying early is a great way to build long-lasting relationships with your suppliers.
12. Invest in New Technology
We read so much regarding, “utilising old technology” or “buy refurbed tech”. But why would you? Yes, in theory, it is cheaper than buying the latest all-singing, all-dancing version of what you want/ need. But buying cheap means you’ll often buy twice. You pay for what you get with technology and new generally uses less power than its predecessor and is enhanced for the Now.
Adopting new technologies could allow staff to automate or reduce previously time consuming tasks, increase overall efficiency and cut down on third party costs.
13. Product Utilisation and Again, You Pay For What You Get
How are products being utilised in your operations? Are people double and triple bagging in bins because waste is breaking through one bag? You pay for what you get and there’s a lot more to cost saving in business then simply buying cheap.
14. Recycle. Do it for the Environment as well as Cost Saving
Printer cartridges, paper, cardboard, plastic, cans, bottles, batteries, mobile phones; if it can be recycled, recycle it. Make sure you use a fully certified business waste management solution; this not only means you’re doing the right thing by the environment but it also ensures your business is compliant with relevant laws. Why is this in a cost saving blog I can hear you asking? It’s a little known fact that you can get rebates on some recycling and waste. Take advantage of this and claw back some of what you spend on waste management.
15. Negotiation Should be on a Cost Saving Ideas List. But be Careful.........
Negotiation or bartering may seem a bit old-school but it can yield positive results and it doesn’t have to be you asking for something to be cheaper. With other businesses you may have something of value to offer in return. Reciprocal business or collaboration can open up a whole avenue of cost saving or growth opportunities. Start exploring today!
Suppliers may have promotional offers or rates and although that won’t always be the case, it’s so easy to find out simply by asking.
But be careful with negotiating lower prices with your suppliers too. Your time investment should be a consideration and is it worth it for a few pence off a few products here and there? Cutting a current in half likely isn’t best use of your time and a procurement strategy is way more than simply negotiating every commodity cheaper with a different supplier.
"Number 9 is exactly why we keep going on about cost saving being a procurement KPI (and probably always will be) because technology and processes are forever evolving and progressing. Cloud computing is another point with this philosophy at heart. Most businesses spend a lot of money on software and equipment just to run the business. These costs likely increase year-on-year due to renewing license agreements, updating software and replacing hardware. However, you can switch to the cloud, at a fraction of the cost."