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Author How small businesses can reduce costs without affecting growth  (Read 65 times)

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Offline Isaac Adeniran

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How small businesses can reduce  costs without affecting growth



Many small businesses work on tight margins. As a result, small business owners are always looking for ways to reduce their operating costs without sacrificing the quality of their offering or making the lives of their employees more difficult. So, what are the best ways to reduce operating costs? Below are eight ideas that can help you reduce the operating costs for your business and enable you to generate more revenue and reduce overhead.

Embrace technology:

 There are dozens of online systems and software programs that have automated tons of small business functions. Accounting, website hosting, marketing communications, payroll and more have all benefited from programmes and services that make it easier to manage facets of business.

 In order to choose the right programme or service, there is need to know what you know how to do well. For instance, if you used to be an accountant, then outsourcing your finances might not make the most sense. Hopefully, your answers to question such as this will give you a clear indication of the task or subject matter area that you should rely on technology.

Outsource:

 Instead of relying on technology, experts also say it might be prudent to shift responsibility of certain business practices to another business or consultant. They say one area that seems to benefit the most from outsourcing is advertising and marketing. For many entrepreneurs, this is a pain point. They find that the amount of time they spend on advertising and marketing does correlate to the return on investment. While it might seem that hiring an outside vendor will result in spending more money, the truth is, in the long run, delegating certain tasks to subject matter experts will save you money and should generate even better results.

Shopping around:

 If you work with vendors on a regular basis, you might want to set up a bidding system for projects and work. If you ask three different vendors to provide costs to you, then you can technically use the returned bids to get better pricing. Experts say it is important when asking for bids that you determine what you want them to do for you before you ask for bids. To achieve this, a Management Accountant, Mr Tunde Olusola, says there is need to compile an accurate scope of work or request for proposal for the vendors to bid on, as missing information or added complexity can greatly affect the quoted rate.




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Offline Isaac Adeniran

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Re: How small businesses can reduce costs without affecting growth
« Reply #1 on: March 07, 2019, 12:17:33 AM »
Cut down on costs through telecommunications:

 Leasing office space, paying for utilities and managing a physical office can be a drain on your financial resources. Olusola says, some kind of businesses can allow their employees to telecommunicate. He says, “With the amount of connectivity available today, the difference between an employee sitting in an office and sitting at home is almost indiscernible. Employees will typically also find this advantageous, as they will be able to cut down on their own commute times and expenses.”

Pay invoices early:

A Chartered Accountant, Blessing Odon, says many vendors will offer a discount if payment for invoices are made early. “Even savings of two or three per cent can really add up. At the very least, make sure you pay your invoices on time in order to avoid any late fees or other penalties,” she adds.

Identify inefficiencies:

Odon says there is need to always looking for ways to make the business more efficient. By tightening up the business processes and procedures, she says this can reduce waste in both materials and time. This, she notes will ultimately decrease operating costs. She says, “Empower your employees to look for inefficiencies and identify ways to save time and money.”



NaijaSky

Re: How small businesses can reduce costs without affecting growth
« Reply #1 on: March 07, 2019, 12:17:33 AM »

Offline Isaac Adeniran

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Re: How small businesses can reduce costs without affecting growth
« Reply #2 on: March 07, 2019, 12:18:07 AM »
Cancel unused services:

There are some services that are no longer necessary and should be cancelled to reduce costs. This is because it is easy for unused services to continue to be deducted from bank accounts or charged to credit cards if they have been left on auto-pay. Odon says, “You have to take a look at all of your expenses over the past six months. If you haven’t used a service in 90 days, cancel it.

“It might also be time to re-evaluate the services you do use, so shop around for a cheaper alternative or use the occasion to renegotiate your existing contracts.”



Reduce energy usage:

If you do have an office space, consider making it as green as possible to reduce energy usage. Replace regular light bulbs with compact fluorescent lighting, look to reduce heating and cooling costs by improving your insulation and windows, and cut back on the amount of physical waste. Encourage employees to communicate through emails or other electronic means if they don’t already do, and ask your vendors to do the same. This can drastically decrease the cost of your monthly office supply order. Experts say cutting operating costs for your small business is not impossible, but depending on how comfortable you are working within a lean budget. It can take some time to get used to it. Don’t be afraid to spend money on the services and people you really need, but take an extra moment or two to consider the long-term cost of ongoing services or expensive technology.





NaijaSky

Re: How small businesses can reduce costs without affecting growth
« Reply #2 on: March 07, 2019, 12:18:07 AM »


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