Decreasing business costs

Despite being a number of years since the global financial crisis, many small business owners are still finding it difficult to make ends meet and earn a decent living. 

There are only two ways to improve your profitability; one is to decrease costs and the other increase revenue.

 Usually the best solution is a combination of both.  In this blog I will focus on ideas for decreasing business costs.

•    If you have offices can you rent out any extra office space you have.
•    Consider if you really need offices or can you work from home.   If a home office is not an option can you share an office with someone else.  With technology providing so much more flexibility today there are more choices to share office and desk space.
•    Sell any furniture or equipment that you no longer need.
•    Determine whether you are getting maximum capacity out of your staff members, if not you can contract them out to another business for a few hours a week.  Or look at reducing your permanent employees and use contractors.  The work environment has changed a lot and there are many people who work for themselves and contract to others in their area of expertise.
•    Do you have any subscriptions that really aren’t adding any value to your business, if so cancel them.
•    Review all of your marketing.  Are you getting an acceptable return on investment for the money you are spending or could you get a better result changing what you are doing?
•    Analyze every expense you have. Be really tough.  Do you really need those expenses?  Are there other options for achieving the same thing?
•    Review all of your service agreements, e.g. can you get a better rate for your telecommunications. Can you use your landlines more effectively and reduce you mobile bill.
•    Talk with your accountant to ensure you are claiming all the things you should.  You might be paying for things personally that could be a business expense.  The book Slash your Taxes is a good read to give you ideas of what you can claim.
•    Keep good records so it’s easier for you to know what is going on in your business and make more informed decisions.
•    Talk with fellow business owners about the things they have done to improve their bottom line.
•    Keep an open mind.  Sometimes you can get really stuck in your ways and just because you have always done something a certain way it doesn’t mean that continuing to do it will give you a good result.

There is no easy answer to dealing with tightening profit margins.  Take the time to go through your costs with a fine tooth comb and I’m sure there will be a number of things you could change and even though they may be small, they will make a difference.