In lean times, finding ways to minimize and cut costs is crucial for the survival of your business. While some situations can lead to hard choices having to be made, taking a smart approach to cost-cutting can help sustain you through a tough period and set you up for increased financial success down the road.
Focus on efficiency
When you run a brick-and-mortar business, you’ve got to pay to keep the lights on — literally and figuratively. A great way to get the most for your money and decrease overall costs in the long run is to invest in efficiency. LED bulbs will cost you a little more up front than incandescent bulbs, but you’ll reap the residuals with lower energy bills and longer lifespans.
You have to pay to heat and cool your storefront, and if you operate in a climate with extreme shifts, this can get expensive quickly. Money Crashers writer Brian Martucci suggests starting with a smart thermostat in your quest to cut overhead. Smart thermostats automatically adjust to ensure an optimal balance of comfort and efficiency, and they can be a big help in saving big money.
Going even further will help maximize your gains in efficiency and help increase cost reduction over time. Martucci recommends simple upgrades like blackout curtains for keeping heat out in the summer and resealing door and window frames. If you need new windows, upgrading to double-pane will cost more than single-pane, but Martucci notes that they will likely pay for themselves over their lifetime.
Scale back and streamline your operations
If you run a business that can stay up and running anywhere, eliminating overhead costs is a great way to shore up your financials. Alyssa Gregory, writing for The Balance Small Business, suggests downsizing, co-working, and converting into a home-based business as ways to minimize costs. Susan Ward writes for The Balance Small Business that running a business entirely from home can have the net effect of saving money on insurance and taxes.
Even if you don’t completely abandon a physical commercial space, allowing employees to telecommute as much as possible can add to your savings. Martucci writes that telecommuting gives you the opportunity to downsize your commercial space and cut down on utility expenses. It also has a positive effect on team morale, allowing your employees to save time and money they would otherwise spend commuting. What’s more, if you meet a time of financial hardship, by leveraging new solutions and empowering your employees in the process you stand to create more loyalty and dedication within your workforce.
Your business should be working for you, and that includes when you’re looking for ways to reduce costs. As Ward notes, bartering is a custom as old as the concept of business itself, and it remains an effective way to improve your company’s financial stability today.
Investopedia writer Will Kenton notes that a common example of business-to-business bartering is an exchange of advertising privileges. If you are willing to promote other local businesses, a barter exchange can save on advertising costs and help drive revenue by bringing in new customers.
You can also barter with your business’ goods and services. Kenton offers the example of an accounting firm offering an exchange of services to a contractor, like an electrician or plumber. Taking this approach can help you cut the costs you might incur when upgrading your facilities to be more efficient, building value upon value.
When money is tight for your business, think about the big picture. You’ll want to strike a balance between making decisions that are smart for your immediate financial needs and savvy for the longevity and operational strength of your business. Explore all avenues and make choices that are most logical for weathering the storm.