Business success is, in principle, simple. All it requires is to generate an income higher than the cost of running your company. Anything leftover once the latter has been deducted from the former is profit. Of course, in real life, things are a little more complicated than that. Yet there are always ways to reduce your overheads and so claim a larger portion of the profits. Keep reading to find out what they are.
Run an audit
Audits are a great way to find out precisely where you are wasting money. Indeed, an audit can show you where you could save resources, time, and person-power. All of which can save you money. Running an internal audit is always a possibility too. Although, they are often most effective when carried out by someone independent of your organization that can come in with fresh eyes and doesn’t have preconceived ideas about the way things ‘should’ be done.
Paying an outside person to come in to show you where you can save, may sound counter- initiative. Yet, it’s all about the scale involved. After all, if they charge you $1000 for the week, but help you make savings to the tune of $20,000 a year, it’s money well spent!
Lower production costs
Another way that you can cut the cost of overheads in your business is to lower the production costs of your product. There are many ways to do this from scheduling staff in a more effective way, to negotiating with suppliers to pay a lower price for the resources you need.
In particular, remember that buying resources in bulk usually means you can swing a much lower per-unit price, something that can decrease your production costs very effectively. Another option for lowering production costs is to automate repetitive tasks that require substantial accuracy and can help you save vast amounts of money over the long term.
Save on packaging
A quick and simple swap that can help you save on your overheads is to swap your packaging for a cheaper option. For instance, swapping from glass bottles to custom mylar bags could save your business up to 50% on packaging costs. All, without impacting the consumer in any significant way.
If you can’t swap to entirely new packaging, consider reusing products that would just go to waste as insulation or protection in your packaging and shipping. For example, some businesses create packing materials for cloth off-cuts, which means they save on the cost of paper shreds, polystyrene, or air-filled plastic bags. Although, it’s important to make sure that this type of reused packaging will be suitable and safe for the product in question.
Also, it’s vital to remember that by swapping to packaging that weighs less or is easier to ship you can make additional savings in the form of logistics.
Double-check your credit card fees
Very few businesses currently operating don’t take credit cards as a form of payment. However, what many do not realise is that their credit card payment provider could be taking a bigger cut of each purchase that is needed.
The problems here are what is known as credit card purchasing fees and they are not always the easiest or most transparent to understand. In particular, you need to look out for bundles where these usually don’t work out to be a cost-effective deal. Also if your business is using the wrong code for processing credit card payments you could end up being overcharged, so be sure to check these are accurate ASAP.
Shop around for energy rates
Chances are you’ll need energy to power your business, whether you are office or factory-based. The thing is you can quickly save a significant amount by simply checking your electric rate, and finding a provider that offers the same for less. Some providers will be so eager to get your business that they will even cover any transfer fees and deal with the whole process for you.
You can also save plenty of money on energy by conserving it wherever possible. This means turning off machines, rather than leaving them on standby, and using automated or motion-sensor lights wherever possible. The great thing about tactics like these is they not only cut down your electricity bill but are great for the environment too. A bonus you can use to win points with your customers!
Alternatively, why not take a leaf from some of the more eco-minded businesses that are operating and find a way to generate your power. Indeed, you can cut a huge amount of cost in your reproduction process if you swap to renewable energy that you generate yourself.