15 Effective Ways to Cut Costs in Business

When I first moved out of my parent’s house, my spending was out of control. I bought take-out regularly, new clothes often, and fun products frequently.

However, I quickly realized that I was spending too much money on unnecessary things.

After racking up some credit card debt, I realized that I needed to cut costs somewhere.

As a business owner, it can be just as easy to overspend as it was for me.

When that happens, it’s time to review your bottom line and see how you can reduce your spending.

In this post, let’s go over some of the top ways you can cut costs in your business.

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1. Analyze and track the efficiency of your business.

Before you can reduce costs in your business, you need to take a step back and analyze what you’re currently spending money on.

Take a look at your balance sheet and your budget. Look at your production costs, and do an in-depth analysis of your current processes.

Asking yourself questions like, “Is what I’m doing efficient?” and “Am I spending needless money somewhere?”

Once you have a full picture of what your spending looks like, you’ll have a better idea of where you can cut costs.

2. Negotiate with your vendors.

A great way to cut costs in business is to negotiate with your vendors. You should price shop and compare vendors in almost every area of your business.

For example, if you’re deciding on insurance providers or looking at supply costs, you should communicate with the sales reps that you’re looking at other companies as well.

This will let them know that you aren’t afraid to walk away and are ready to negotiate costs based on your research.

3. Bring efforts in-house.

Outsourcing can make sense if you don’t require a full-time employee to do a task. However, bringing your efforts in-house might save you money if you’re outsourcing several projects that could be assigned to one person in-house.

To decide if you need to bring efforts in-house, take a look at your current outsourcing budget, and compare it to the cost of one part-time or full-time employee.

4. Eliminate products that don’t sell well.

Developing products requires time and money. Instead of selling a bunch of products that don’t sell well, focus on the products and services that make the most money.

By concentrating on the products that sell, you can deliver higher quality products. Plus, you won’t waste money on the services that aren’t selling.

5. Hire the right people.

Hiring the right people is important for several reasons. If you choose employees that have specialized skills and are experts in their field, you’ll have an efficient staff.

When your employees aren’t sure how to complete a task, they’ll spend time researching and learning about it on your dime. That can possibly waste both time and money.

If you focus on hiring the right people, you won’t have to worry about whether your staff knows what they’re doing.

Additionally, you should also hire for culture fit as well. You don’t want to have too much turn over, because that can also waste money.

6. Crowdsource when necessary.

While you should bring efforts in-house if you’re spending too much money on outsourcing, if certain tasks don’t require a full-time employee, you can work with freelancers.

Freelancers are generally less expensive because you only have to pay for labor on a certain task. You won’t need to pay for benefits or training.

If you don’t need to have a full-time staffer on board to complete an assignment, consider using freelancers.

7. Evaluate your technology.

One of the top ways that businesses waste money is by subscribing to software you don’t need or stopped using.

It’s important to evaluate your technology needs on a regular basis and ensure your software is up to date.

You can hire an IT person to be in charge of consolidating your software needs and make sure you don’t overspend on technology.

8. Consider a remote set-up.

When I was in college, I worked on a fully remote team of 10 people. If you’re running a small business that doesn’t necessarily require a physical office space, you should consider going remote.

Office space is one of the most costly expenses that companies spend money on, and you might not need to.

In fact, not all companies require physical space. Some positions are suited perfectly fine to a remote set up. This could end up saving you thousands of dollars a month.

9. Buy in bulk.

Of course, a great way to save money is to make purchases in bulk. However, when you do this, make sure that you’re saving money.

Not all items need to be bought in bulk. For example, if your team doesn’t drink a lot of coffee, you don’t need to make that purchase in bulk. However, if your team can drink through bulk coffee quickly, then buying it in bulk will save you money. It just depends on your needs.

To save money, evaluate which items should be bought in bulk and which items can be bought on a smaller scale.

10. Participate in loyalty programs.

Let’s say your company spends money on paper every month. This is probably a repeat purchase that you’ll likely continue making for the duration of your business.

With these types of purchases, you should do some research and see if your suppliers offer loyalty programs.

You might be able to save money from the stores that you make purchases from all the time.

Additionally, you could also work out a trading system with other companies. Don’t be afraid to talk to other business owners and see if you can work out a system with them.

11. Become eco-friendly.

Environmentally friendly appliances are great for the environment, as well as your budget. That’s why you should consider becoming eco-friendly with your purchases.

For example, you could consider going solar, buying an eco-friendly fridge for your kitchen, etc. A lot of appliances can be made eco-friendly and save you money.

12. Treat employees well.

When employees are happy, they become advocates for your company and will want to stick around. This means you’ll spend less money on training and onboarding.

When companies are more focused on the bottom line than their employees, they’ll likely experience a lot of turnover.

I’ve seen this first hand and having a rotating door of employees will end up costing you more money than just treating your employees well from the start.

13. Consider bundling your services.

This might seem like a simple suggestion, but a lot of purchases can be bundled together. If that’s an option, you should consider it.

For example, services such as phone and internet are usually bundled together. Bundling services will typically save you money.

14. Automate processes.

When your processes can be automated, you should do it. This means you’ll spend less money on labor and you’ll have a more streamlined process in place.

For example, if you use marketing automation software, your marketing team won’t have to manually post on social media or send emails every morning. Instead, they can automate that process and it’ll save them time and save you money.

15. Use reward credit cards.

As a business owner, you’re going to spend a lot of money. That’s why you should spend money wisely.

For example, you can get a business credit card to charge things to so you can make use of rewards or cash-back programs. This way your purchases will add up to rewards and bring you money back.

When it comes to reducing costs in business, it’s not about looking for ways to cut corners or take advantage of your employees. It’s about streamlining your processes so they’re working for you.

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Originally published Aug 27, 2020 4:30:00 AM, updated August 27 2020

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Business Growth

How to Find Your Business’s White Space Opportunities

When McDonald’s first opened its doors, they had two items on the menu: burgers and fries. After surveying competitors, the founders saw that in order to stand out as a food company, they had to be different. Instead of offering a multitude of menu options, they decided to hyper-focus on the bestsellers, which catapulted their customer satisfaction.

What McDonalds’ founders did was find white space opportunities in their industry. While other fast food restaurants at the time were offering a diverse menu but lacking in customer service — the McDonald’s team decided to focus on two items so customer service would be at the forefront.

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By surveying what was missing from the market, McDonald’s was able to grow into a billion-dollar empire. The founders saw what customers were lacking and turned that industry gap into a success.

But what exactly are white space opportunities, and how can they be an asset to your company? Let’s find out below.

Sometimes, consumers don’t know what they need until, well, they need it, so it’s up to companies to be proactive. White space opportunities help marketers uncover customer needs that haven’t yet been met.

It’s a useful tactic when identifying how to provide the most value to customers. But, because white space opportunities aren’t as obvious as, say, keyword opportunities, it can be hard to know where to start.

Sounds pretty taboo, right? How can businesses uncover value customers are looking for when the customer themselves aren’t sure what they want? However, you may already have the right tools and knowledge at hand — they just need to be shaped for white space opportunities.

Let’s talk about what you can do to find white space for your company.

1. Innovate upon what you offer customers.

One of the best places to start with finding white space is within what you currently offer customers. Think of Apple’s iPod. Apple’s team probably came up with the idea to add a music player to their product stack by looking at what they already produce. Then, they figured out what other forms of entertainment they can make accessible with their resources.

Consider identifying where, in your products, you can spot white space. Ask yourself where customer needs are and aren’t being met. For example, if your blog team comes across a topic with high interest from your followers, but haven’t written about it yet, that’s white space.

Then, you can decide how to innovate: Are you going to write a series of posts about the topic, include subcategories for smaller posts, or turn the topic into an ebook?

2. Target a different audience segment.

If you’re struggling to find where you can innovate for a certain audience, maybe it’s time to shift your focus. Consider targeting a different part of your audience. For instance, if you’re hyper-focused on providing value for your content marketing audience segment, consider the white space you might have for SEO audiences.

Let’s say you’re in charge of a social media marketing agency focused on B2B clients in the technology sphere. Well, there are plenty of those — and yours is getting lost in the shuffle. Time to find white space.

Instead of marketing your company as one focused on B2B clients in technology, you decide to shift your customer base to one that serves B2B developers. While this is still in the technology space, your focus on a different audience segment allows you to reach out to a market that’s not as saturated in your industry.

3. Ask customers how they use your products.

Research how customers fit your offerings into their day-to-day. You might find white space you didn’t know existed.

For instance, if you’re part of a company that focuses on chatbot software, survey your customers and ask them for their stories. Ask them how your services fit into their companies and webpages.

Let’s say you find that customers really enjoy using your chatbots for lead nurturing on ecommerce sites. That’s an area you missed during the initial launch, but knowing this, your team can now work on making chatbots more online shopping-friendly. Maybe you add a way for your customers to demo their products and prices within the chat.

That white space will help you serve your customers and improve their selling strategy.

4. Find where your company is different.

Imagine you’re in charge of an analytics software company. Aware that there’s a countless number of those companies in the market, you’re struggling to find white space.

In your business plan, you recognized that your company is going to be an easy-to-use, intuitive platform. That’s the element that sets you apart from competitors. That’s white space.

A lot of analytics and reporting software is hard to implement. Yours eliminates the struggle of turning numbers into results. Your company is going to be the one that’s user-friendly — even a newbie can find success.

Additionally, you can use this discovery to find the most qualified leads. If your company is struggling to find white space, revisit your business plan. You may uncover the tactic you need to get back on track.

White space can be used to solidify your company’s branding strategy. Maybe you’re struggling to identify where your product fits in the market. If you find a space for innovation, you can use that to strengthen how your company is seen by others.

The McDonald’s founders didn’t have to look far for their opportunities, but things have changed since the 1950s. You might have to dig a little deeper and do some research, but ultimately, your business has something about it that’s attractive to customers. Once you find it, you’ll be able to keep delighting your clients, growing your company, and changing the industry.

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Originally published Aug 18, 2020 4:00:00 AM, updated August 18 2020

Topics:

Business Growth

How These 7 Companies Thrived During the Recession

In 2008, the Great Recession was all over the news. At 14, I didn’t exactly know what that meant. However, I understood that my parents were struggling financially.

While it was the first economic crisis I was old enough to remember, it isn’t the only economic downturn we’ve seen, nationally or internationally.

In 1997, there was the Asian financial crisis. After 9/11, the New York Stock Exchange closed for four days, the first time that had happened since World War I.

The world has faced uncertain times before, and I’m sure it will again. But, how do companies thrive during financially rough times?

In this post, we’ll review seven companies that grew during the recession and see how they succeeded during economic uncertainty.

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1. TeamLogic IT

TeamLogic IT provides IT solutions and consulting services for small businesses. Interestingly, IT has been a growing industry during times of uncertainty, including the 2008 recession.

Since consumers are becoming more and more dependent on newer technologies, this industry usually does well during economic recessions. Technology impacts almost every area of our life from our security to our entertainment.

In fact, sales for technology increased during the 2008 recession.

Because of this trend, TeamLogic IT weathered the storm of 2008 well.

If you want to start a business, it’s important to consider whether that industry has done well during times of economic unrest. Industries such as tech, discount stores, accounting, grocery, healthcare, and DIY/repairs do well.

2. Netflix

You might be thinking, “Of course Netflix survived the 2008 recession, it’s a huge company.”

However, in 2008, Netflix wasn’t yet the media giant it is today.

In fact, Netflix introduced a new product (the streaming service), around the time of the Great Recession as a response to dying video rental stores.

Then, during 2008 and 2009, the company continued to work on partnerships with organizations like Xbox so people could stream through those devices.

It was these innovations that allowed the company to continue to grow during the economic downturn. In fact, they were increasing memberships and subscriptions during the 2008 recession while other companies were struggling to maintain revenue.

Additionally, 2008 wasn’t the only time this company has faced a recession. Netflix was founded before the dot-com bubble and had to weather that storm in the early 2000s.

It was during these times that the brand innovated ways to continue to appeal to their audience, whether that meant introducing new products or expanding its products with partnerships and collaborations.

3. Citigroup

Every year, the Federal Reserve conducts stress tests to see how much capital banks would have if they were subjected to hefty losses.

Interestingly, in 2014, Citigroup had grown in assets, making it one of the only banks to have grown since the 2008 recession.

This bank grew in the aftermath of economic distress while others didn’t because they worked on branding and offering quality services. Citigroup started supporting certain community services which helped with their brand story.

In fact, marketing played a large role in Citigroup’s ability to grow after the 2008 recession.

4. Lego

Lego is an interesting case study because you might think that toys and amusement parks or play centers are unessential, so the industry would be impacted by an economic crisis.

However, during the 2008 recession, Lego decided to expand into a global market.

The company concentrated its efforts on building revenue in Europe and Asia while the U.S. faced economic distress.

By doing this, the company reached an all-time high profitability during a recession. This company expertly knew to expand to global markets when its main market was facing an economic downturn.

5. Groupon

Groupon is another company that you might think, “Of course they survived an economic downturn.”

However, Groupon was just a startup in 2008. In fact, the company launched in the middle of the Great Recession. How can this happen?

Well, surprisingly, startups tend to do well during recessions because they usually fill a need and are able to spend less money because of discount prices.

With Groupon specifically, the site did well because it was offering discounts.

Discounts are in extreme demand during recessions because consumers are trying to cut costs wherever they can. Discounts actually offer consumers a way to survive a recession, which is why discount stores tend to do well during economic instability.

6. Mailchimp

Mailchimp has been around for almost 20 years and has survived several economic uncertainties. The company weathered the economic downturn in 2001 (in fact, that’s when it was founded), and the 2008 recession.

So, how did the brand survive and thrive during a recession? Well, the company was founded during the 2001 crisis and was able to do well because of it.

In 2008, the company survived because they changed their entire business model. They became a freemium business, and their revenue soared after that.

Many customers wanted to use Mailchimp during an economic crisis because it was free. By adjusting to the times and offering a free product, the brand was able to grow and they’ve maintained that business model ever since.

7. Warby Parker

Warby Parker is another example of a brand that was founded during the Great Recession. The reason they were able to succeed during this time? They filled an enormous gap in the marketplace.

While you might think that you shouldn’t start a business during an economic crisis, it’s actually a good time to notice gaps and pain points in the marketplace and fill the need.

Warby Parker did that when they realized it was hard to purchase an affordable pair of fashionable glasses online.

They filled a need and customers showed up even though they weren’t spending a lot of money. The company was marketed as affordable (which was necessary during a recession) and customers needed an affordable glassware solution.

Even if your company isn’t as big as these examples, remember that a lot of enterprise companies today started during a recession.

As another example, Microsoft started after the recession in the 70s. Apple transformed its brand after the 9/11 economic downturn by introducing new products and investments.

The global economy is resilient and uncertainty has always passed. The economy will recover, but it’s important for your company to be prepared for when a financial crisis happens.

These companies succeeded because they looked for new opportunities, expanded into new markets, adjusted their offers, developed new products, and gave folks a cost-efficient alternative. Innovation and creativity can help you succeed in the next economic downturn.

Want to learn more about business growth? Check out our ultimate guide.

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Originally published Jul 7, 2020 4:30:00 AM, updated July 07 2020

Topics:

Business Growth