“The budget is not just a collection of numbers, but an expression of our values and aspirations”. – Jacob Lew
Cutting expenses and maintaining a frugal budget, does not mean that your business would not have what is essential for it. Cutting expenses is more about making smarter and more intelligent business choices that would save money and boost your business, since your company would have more funds to serve customers better. As customers become happier, your company would gain more business, increase its market share, enhance profits, and be able to serve customers even better than before. Not just external customers, but your company would be able to look after its employees better too – better compensation and benefits, more opportunities for growth, more training and development opportunities and other such benefits that encourage employees to work better and be highly productive.
In order to serve customers better – both internal and external – a company must keep a strict check on its expenses and consistently look for ways to reduce them. Even if your company is doing well, unchecked expenses can quickly spiral out of hand and reduce your company’s profit margins. Many companies make the self-defeating blunder of ignoring their expenses and do not invest time and effort in tracking them. The good news is that there are many tools and software now available to help keep track of expenses and ensure that unnecessary expenditures come to the forefront. What methods does your company employ for cutting expenses, thereby enabling better service to customers?
Outsourcing is a great way of cutting expenses in your business. There are many tasks in a company, which are important but possible to do without time and effort on the part of the business. Activities like content writing and press releases, taxes, data entry and other such vital activities, which can be outsourced easily to professionals trained to do them. According to data collected by studies, the cost of sourcing and hiring a new employee is around $4000 and each new hire would need extra investment in terms of on-boarding, training, increments, bonuses, meals, leave, insurance, and other such overheads. Smart companies, looking at ways of cutting expenses and to serve customers better, turn to ‘CloudSourcing’ by which they can hire top class professionals to work on these activities. Some highly qualified people no longer work in companies but are self-employed, and have the ability to produce high quality work faster and more efficiently and at a fraction of the cost of full-time employees. For example – people with top quality communication skills work from home writing and editing content for clients as and when required. This way the company is not only cutting expenses required for full-time person, but is also able to get excellent content to further the business.
There are some tasks in a company, which become important only during certain times of the year. Data entry and filing papers are examples of two such activities that can be easily handed over to an intern or someone looking for part-time work. The person would gain some on-the-job experience and earn some money, while the company would accomplish these important tasks at a cost that would be a lot lower than employing a full-time person for these tasks. Cutting expenses through such simple yet effective methods, would allow your company to divert those resources on creating new and innovative products and services that would in turn serve customers better.
Cutting expenses in a business must become habit and a process that everyone abides by, contributes towards, and understands the importance. Many companies make the mistake of keeping large inventories and stocks of items they could need. This is an unnecessary expenditure and locks in huge amounts of liquid cash. It would be prudent to stock the most basic quantities and buy things for the office only when required. This is an extremely effective method of cutting expenses. For example – a friend took over as the administration manager in a large company. While tallying expenditure versus usage, she discovered that the stocks on hand were far too much in comparison. She physically checked all the stocks and realized that many of the items were obsolete or no longer in working condition – they had to be thrown away, which was a colossal waste. She stipulated the exact in-hand stock quantities for each item and refused to sanction purchase of any items beyond the limit. She was able to save the company approximately $1000 each month just on stationery items.
The business environment is constantly changing and in your efforts on cutting expenses and serving your customers better, you must remember that your company’s vendors and suppliers want to serve you better too. Take advantage of your relationship with them by asking them to give you their best deals, discounts, and or offers – most of them would oblige to keep your business and you would end up substantially cutting expenses. This is true not just about products. You could have a lease or insurance or be using the services of a company – it would be prudent to check back with them to find more cost-effective options and do your own research on what is available. The more information you have about the market, products and services – the better equipped you would be to ask for a better rate. The fact is the money you save by cutting expenses can be used to provide more cost effective rates and better quality products to your customers. You would be serving them better, making them happier, which in turn would make them buy more and encourage others to conduct business with you too.
Get everyone in the company involved in the cutting expenses ‘exercise’. Ensure that people do not print things unless necessary. Even for meetings, it would be better to send files, presentations and other reading material online rather than printing several copies of the same document. Wastage should be kept to the minimum and as far as possible every person must be responsible enough to re-cycle and re-use things like paper. Not only would your company be cutting expenses, it would also be contributing towards saving the environment – which is now a big selling point with clients and customers, especially those who actively participate in such activities.
With the rising prices of electricity, it would be prudent to invest in options like solar power systems and energy efficient electrical appliances and lights. These would cost your company in the present, but over time these methods not only pay for themselves, they also help in cutting expenses dramatically.
In an earlier exposition we spoke about boosting business through simple yet effective strategies. Your company could be highly successful in cutting expenses by using traditional and inexpensive methods of advertising such as flyers and eye-catching banners. These methods get your company the attention it deserves, in a cost effective manner.
The reason for cutting expenses should be two-fold – increasing profits for the company and having additional resources to serve customers better and longer. Follow a policy of doing things right the first time – doing things well from the start would always prove to be a more cost effective method than skimping to begin with and constantly spending money on fixing them. Irrespective of the size of your business, cutting expenses makes good business sense, as it helps to maximize efficiency, utilize your available resources to the optimum, and increase your profit margins on a sustained basis. Not only would you be stocking up for emergencies like market crashes but would also be able to serve customers better by providing them the best at costs that no one else would be able to compete with. Cutting expenses, therefore, equips your company to compete in a fierce market and keeps you ahead of your competitors.
