The right kind of cost-reduction measures can help a small business survive and grow. Introducing processes that help to reduce costs does not call for substantial investment in terms of time or effort. All you need is a keen business sense to make smarter choices while spending or investing your cash reserves. It means focusing even on minor decisions that help your business to grow. Here are some tips.
#1 How Your Rent Expenses Matter
Many small businesses operate from larger premises and take long term leases far higher than their current requirements. They work on the assumption that an expanding business needs bigger premises. Rarely do they realise that a higher rent is a cost that adds significantly to their business expenses.
Sometimes, businesses also hold bigger inventories of goods that require space, which is why they end up leasing vast business premises. If this sounds like you, it’s essential to assess the possibility of smaller premises, shorter leases, lower inventories, and their effect on lowering your costs. Such a move reduces many other business costs due to cost-cutting flow-on effects.
#2 Take Your Business Digital
Small businesses benefit by adopting various digitization processes. Digital technology is advantageous because it helps to reduce the traditional costs of business operations. Some of the ways to go digital are:
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- Going paperless to the extent necessary
- Moving some processes like accounting to the cloud
- Customer engagement through website feedback and social media
- A user-friendly app for better and faster contact with customers Use of social media for advertising to reach and attract a larger customer base
- Use of predictive analytics for ad spend that integrates with the existing tech to stretch your dollar as much as possible
While avenues for digital interactions are ever on the rise, small businesses need to work within their current IT budget and infrastructure. Digital transformation does not mean you have to opt for all or nothing. Many small businesses use their ability to leverage their infrastructure to bring about digital improvements and create a road map to move to the next level of digitisation and cost-cutting.
#3 Why Cloud Accounting Is Cost Efficient
Traditional accounting software takes too much time and effort and often does not add value to a business. Consider investing in cloud accounting software and save money and time as well.
Online accounting means small business owners remain connected to their data and their accountants. Various cloud accounting software like Xero, Intuit Quick Books, Saasu, etc. are scalable and easy to use. The software can integrate with a whole ecosystem of add-ons.
Using cloud accounting drives down as well as frees accounting costs. Users can make the most of the software’s functionalities to upload data, update it automatically, get real-time data, and free their accountant’s time for productive work. It reduces upfront business costs such as maintenance, version updates, system administration, and failure costs because the cloud service provider manages these.
Waste Of Any Kind Is A Cost – Reduce It!
Toyota popularized its ‘seven wastes’ model that can be used by any business of any size to reduce costs. The avoidable wastes are:
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- Overproduction
- Wait-time for the arrival of raw materials
- Transport costs of internal movement of the product
- Over-processing or inappropriate processing of products
- Defects in products
- Inefficient use of an office or factory
- Layout Unnecessary inventory
Small businesses can avoid these wastes by thinking out of the box and ensuring they run a lean business with no compromise on the quality of their products and customer service.
For effective and sustainable cost reduction opportunities & efficiencies that will increase your bottom line, contact the experts at Benchmark Cost Solutions at this number – 02 9525 0777. If you prefer, write to us at this email address, and we will revert quickly.
Thanks for reading,
Benchmark Cost Solutions Team
02 9525 0777
