5 Ways You’re Spending Too Much on Your Business
With 9 out of 10 small business failures attributable to low cash flow, trimming operational expenses is a priority for any successful business. Some cash crunches are caused by economic downturns and other external factors, but frequently, budgetary shortfalls are a symptom of overspending on expenses where you could be saving. To address this, it’s worthwhile to review your budget and identify places where you could trim costs with smarter spending. Here are five areas where you may be spending too much on your business.
For most companies, payroll is one of the leading operational expenses. With recent health care changes, full-time employees cost more than ever. Three major strategies can help cut payroll costs:
First, because of recent advances in technology, many business functions can be automated or semi-automated through the use of computers, smartphone apps and robots. Any repetitive task that does not require human creativity should be considered a potential candidate for automation.
A second way to cut payroll costs is outsourcing. Outsourcing can avoid the costs of benefits for full-time employees and can also reduce the number of billable hours your company pays. Candidates for outsourcing include non-core business functions as well as core business functions that can be performed more effectively or efficiently by hiring specialists.
A third way to cut payroll costs is by hiring part-time employees instead of full-time workers. As with outsourcing, this can reduce both the number of compensation hours you owe as well as the cost of benefits.
Marketing and Sales
One business function that lends itself to outsourcing and automation is marketing and sales. Frequently, companies spend money on traditional advertising or online ads without tracking their return on investment (ROI), which can lead to waste. You can increase your marketing efficiency and lower your expenses by outsourcing your online promotional efforts to a digital marketing agency that can track your ROI and help you find the right balance between advertising and methods such as content marketing and social media marketing.
You can also get more bang for your sales investment buck by using automation tools. Customer relationship management (CRM) tools can help you focus on your best prospects, plan your sales contact activity, personalize your sales pitch and follow up systematically, all of which tend to improve sales efficiency and thereby reduce wasted efforts and spending.
The rise of cloud-based accounting apps has made bookkeeping more cost-efficient than ever before. Many traditional paperwork tasks can be streamlined. Tools are available to automatically pass point-of-sale transaction data into electronic records systems, digitally scan in expense receipts, automatically track inventory and keep books in sync with sales and spending. Automating these tasks makes it easier to work with an accountant.
You can further increase efficiency and cut costs by outsourcing to an accounting firm rather than hiring an in-house full-time accountant. An increasing number of accounting firms offer remote support through cloud-based apps, charged on a scaled basis.
Utilities are another area where technology can help you cut expenses. Traditional phone costs can be slashed by adopting VoIP services that leverage the internet for phone and communications services. Another way to cut utility costs is by using energy-efficient and smart technology, such as energy-efficient light bulbs and lighting and heating systems that automatically adjust to your work routines for optimal efficiency.
IT costs have fallen in recent years thanks to the rise of cloud-based services. Traditional on-premise IT centers and software represent high costs from equipment, licensing fees, utilities and tech support. By deploying cloud services, you can reduce your equipment costs dramatically while avoiding software licensing fees and outsourcing your tech support to your provider.