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Cutting Costs in Business: 6 Effective Ways

What can you do to keep your business successful without having to lay off employees and cutting costs in business?

The best way is to reduce business expenses.

 

cutting-costs-in-business

 

How to do it profitably and painlessly, without breaking the law?

Let’s look at six working ways.

 

Cutting Costs in Business: Business Process and Service Automation

Experienced and hardworking employees are half the success of a business.

However, it is not necessary to keep a large staff of professional and well-paid specialists in one line of business.

In a small business, one or two strategists and/or managers are enough.

And all work on the debugged schemes, turnover, and analytics can be entrusted to special programs.

Thus you not only reduce the cost of employees’ salaries but also make business processes more debugged and efficient.

Also, to reduce the training processes, it is worth having a system of training employees.

It is easy to pick a custom LMS development company specifically for you.

For example, financial management software is replacing financial departments.

And chatbots have become an alternative to the sales department and HR specialists for online interviews for basic positions.

 

Part of the Employees – Remotely

Optimizing the staff to reduce business costs does not necessarily mean firing some employees or cutting their salaries.

Such drastic methods can be avoided by transferring some people to remote work mode.

For you, it saves money in the workplace.

For the employee, it’s convenient and even more motivating.

Besides, you can attract specialists from any region where salaries can be significantly lower, and the choice of good employees is greater.

Think about whether, for example, an account manager needs to be in the office from 9 a.m. to 6 p.m.

Perhaps it would be better to organize his constant communication by phone, mail, and messengers? The vast majority of online stores do just that.

Of course, in this case, it is important not to give too much freedom.

Clearly defined KPIs can help, not only with volumes but also with deadlines.

And it is essential to understand that strategically important employees and managers cannot be transferred to a completely remote working model.

So making a completely remote office is unlikely to work.

 

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Outsourcing Instead of Non-Core Departments for Cutting Costs in Business

It is not necessary to keep your own logistics or FEA department if, for example, you are only selling foreign goods but not importing them.

Also, many small businesses prefer using an outside contractor for legal or accounting issues, design, website creation, and maintenance, etc.

The advantages of this strategy are obvious. First, there is no need to spend money on maintaining and training staff.

Second, it is piecework pay (for a project or for specific amounts of work, rather than at a rate per month to a full-time specialist who may not be doing anything half the time).

Among the main disadvantages is providing information to third parties.

Corporations often sign non-disclosure agreements with contractors. But in small businesses, this practice doesn’t work.

In addition, the contractor often does not have an overall picture of your situation.

Even if you go to the same partner, the performers on your project may be different.

 

Abandoning Ineffective Marketing and Advertising Tools

Today even big businesses are cutting back on advertising and marketing.

For example, in 2017, Procter & Gamble cut its advertising output by 41% over the year and halved the number of online resources where it advertised products.

Russian banks and automakers severely cut advertising and marketing budgets.

Medium and small businesses are also following this trend.

 

Rejection of Unprofitable Projects

Some projects are done for images.

That way, you have a well-known brand in your portfolio and add to the reputation of your business.

They often do such projects at a loss.

Think about whether they are so important to you in a difficult period when you need to cut costs in business.

It is also worth evaluating all the projects one more time and trying to identify the unprofitable ones.

For example, if you make mass purchases for several projects at once, you have deferred payments, or payment for your work gets heavily delayed.

You can use special financial and management accounting programs to analyze the profitability of individual projects or activities.

 

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Joint Promotions and Barter

To cut costs in business, you can team up and conduct joint promotions and advertising.

For example, with neighbors in a shopping or business center.

Such a scheme is especially suitable for thematically related businesses.

For example, a photographic studio and beauty salon can order one large advertising banner on the facade of their building.

Unite to hold a master class on cooking pies can cafe and cookware store.

Thus you not only save significantly on the marketing budget but also expand the audience of customers.

We have offered you generalized methods for reducing costs.

Don’t forget that every business is different, and so, its owner.

Every company has specific challenges that are unique to it.

All businesses today are in a difficult position.

Most likely, those who can continue to operate successfully with minimal production and marketing costs will be able to “hold on” and “blossom.

Inform the consumer about the merits of your product without investing a lot of money.

This is the approach that can be called effective!

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