Like all other businesses, you’re probably looking for way to control expenses. The less you spend, the higher your profits. At the same time, you need to keep your team comfortable. Keeping the air conditioning switched off may reduce your electricity bills but you’ll have a disgruntled team. And clients won’t like coming to your office. To be effective, cost cutting strategies need to be practical and sustainable. Here are our top 10 ideas.
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10 Best Cost Cutting Strategies
- Build a cost-conscious culture
- Relocate
- Embrace remote work
- Find new vendors
- Renegotiate client contracts
- Cut travel expenses
- Make bulk purchases
- Automate
- Go green
- Evaluate memberships and subscriptions
1. Build a cost-conscious culture
When everyone on your team feels accountable for expenses, they will automatically be more frugal. The idea here is to instill a sense of ownership over the brand and encourage participation in cost cutting strategies.
It begins from the top. Senior management must develop and demonstrate responsible spending habits. Having clearly defined expense policies also helps. Employees must know what expenses they can make independently, when they need approvals and the consequences for non-compliance.
Financially responsible employees may come up with their own ideas to cut costs. After all, they are the most aware of where their workflow is generating waste. Recognize and reward these initiatives to encourage others to join in.
2. Relocate
Having an office in the right location is important. But it doesn’t have to be in the heart of the city. When you’re looking at cost cutting strategies, look into the pros and cons of your current location. Moving to a section of town with cheaper commercial real estate could be a good idea. In addition to the rent, moving office may also help lower the cost of utilities.
Or you could consider taking up a managed office space with The Office Pass. These are fully furnished, ready-to-use office spaces where you do not have to worry about overheads like electricity, air conditioning, internet, etc. All you need to fit into your budget is a monthly rental fee.
3. Embrace remote work
The pandemic proved that working remotely can be as efficient as working in the office. Embracing this concept allows your employees to work from wherever they may be and cuts down on office operational costs. You can go fully remote or consider a hybrid working style. Either way, you’ll need a considerably smaller office space.
When you do need a team to get together, you could rent a few desks or a meeting room at coworking spaces like The Office Pass. You can rent desk space for a day, a week or have a desk reserved for you throughout the year. The Office Pass has 1-month, 3-month, 6-month, 9-month and 12-month packages. It’s convenient for you and your employees.
Also Read: How to Create a Winning Email Marketing Strategy?
4. Find new vendors
It isn’t just manufacturing businesses that need to assess vendors. Even a consulting firm will have vendors for security, travel management, etc. Often the comfort of dealing with a known vendor keeps you from looking for alternatives. But this could be affecting your bottom line. You may be paying a lot more than the current market rates.
Hence, take a closer look at these contracts. Do they offer the best terms? Can you bundle services to get better prices? If your current contract isn’t cost-effective, look for someone else who can offer better rates. In today’s competitive market, there’s always an alternative – you just have to find it.
5. Renegotiate client contracts
If you look through your client roster, you’re sure to find a few clients who don’t add much value to your portfolio. You probably still work with them to maintain a good relationship. Or, they’ve been promising a big contract that just hasn’t materialized till now.
It’s time to get realistic with these clients.
They may not contribute much to your profits but your team still spends time and effort on their projects. If required, sit down with the clients to renegotiate contracts. Else, you may find it more profitable to end that relationship. Your team can then use their time to pursue new clients who offer more value.
6. Cut travel expenses
Travel is a major expense for businesses. It’s not just about flight tickets, you have to also budget for your employee’s accommodation, local transportation, food and so on. It is no surprise that cutting down on travel is one of the most common cost cutting strategies adopted by businesses.
As far as possible, replace in-person meetings with video calls. Sometimes travel is unavoidable. Your team may need to visit a site or inspect products before they are shipped. Design and implement a company travel policy for such instances. This could define the type of hotels to be booked, meal budgets, etc. You could also consider corporate travel partner platforms that offer special corporate rates for flights and hotels.
7. Make bulk purchases
Shopping wholesale is always more cost-effective than shopping retail. This is true even for your office supplies. To keep your costs low, encourage departments to make joint purchases wherever possible. This gets you access to better deals and allows you to save on shipping fees. It also reduces the frequency of making purchases and thus, minimizes the administrative overhead.
While bulk purchasing is beneficial, it is equally important to avoid overstocking. You can avoid this with a shared Google doc to track what’s required and your consumption patterns. Your HR and/or Admin team can then make bulk purchases once a month or as required.
8. Automate
Make technology your friend. Here’s a simple idea. One of the most common cost cutting strategies is to regulate the use of electricity. When someone’s not in the room, switch off the lights and fans. But, people may forget to do so. Instead, use motion detector technology and timers to automate switching on and off your electrical devices.
Similarly, chatbots and automated response systems can lower the need for additional live agents during peak season. Automating your manual invoice processing systems can make the process faster and lower costs. These small savings can make a big difference in the long run.
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9. Go green
Digitizing documentation is good for the environment and your balance sheet. If something needs to be printed, make sure you’re using both sides of the paper. As far as possible, avoid printing entirely. In terms of cost cutting strategies, this move reduces the paper, files and printer ink you need to buy. You need less storage space too.
Going paper-free also contributes to cost management by making teams more efficient. For example, it cuts down on manual tasks like organizing files and seeking approvals. Digital documents are easier to access and share. It facilitates collaboration and team leaders can approve documents remotely, even from their phones. Thus, it smoothens the workflow and ensures continuity.
10. Evaluate memberships and subscriptions
When we talk of subscriptions, we’re not thinking of just newspapers and magazines. We’re talking about your subscriptions for cloud storage, research databases, online marketing platforms, cab services, streaming platforms, delivery services, and so on.
Take a look at how you are using these services. Are they still meeting your needs? Is there a better alternative available? Cancel the subscriptions you feel are unnecessary and see if you can negotiate better rates for the ones you need.
Similarly, are you a member of networking groups or business associations? If these memberships are paid, look at the value they are providing.
Cost-cutting doesn’t have to be synonymous with layoffs. Look at your other expenses first. Electricity bills, office space rentals, printer ink, taxi fares, they can all add up. The good news is that small savings add up too. All you need to do is evaluate your working style and make a few adjustments.
Switching to a managed office by The Office Pass (TOP) would tick a number of points off this list. Firstly, you’ll pay a much lower rent and won’t have to worry about electricity, housekeeping, security and other such overheads. By sharing the floor with other businesses, networking becomes easier too. You may no longer need expensive club memberships. It’s a win-win choice for your business and your employees. Want to know more; get in touch at 8998 28282.
