7 ways small businesses can minimise costs to maximise profits

in Money by Staff Writer
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Saving money

With economic conditions mirroring Europe’s financial uncertainty, many business owners can become confused whether to focus on profit generation or cutting costs - both are essential when it comes to driving margin improvements in 2012.

Buy office supplies online

There’s been a lot of media coverage recently about consumers using the internet to make purchases for everything from food to cars. As a small business owner, you can take the same approach by looking for great deals for your business online.

Check with your current suppliers if they have reduced internet pricing, or do a web search to find a new supplier. Many Australian businesses offer reduced prices for staple office supplies and will also give you free delivery and an even further reduced price if you use automatic purchases – handy for products you know run out at a prescribed rate.

Using this mindset across various parts of your business, you could increase profits in 2012.

IT effectiveness and technology upgrade

Having effective and reliable communications is a top priority for small businesses and ensuring that your IT and telephone systems are serving the needs of your business should be regularly reviewed. Remember, technology is there to serve your business, it should simplify and improve work processes and facilitate the recording and accessing of information.

Consider the following for your business:

  1. Rather than shelling out thousands for commercial software, there are dozens of applications and products available for free. Research open-source software - platforms built by a network of volunteer programmers.
  2. Teleconference services can save you time and money by allowing for virtual face-to-face meetings – meaning you don’t have to fly interstate just to see people. As an added bonus, they help you to develop better relationships with customers and suppliers that you usually speak to on the phone.
  3. Adopt VoIP calling systems and get rid of landline bills – using the internet to make calls can vastly reduce phone bills.
  4. Cut down on unnecessary printing and introduce a paperless office

Retain staff by keeping them happy

Losing staff has a direct impact on operational costs – dealing with the cost of recruitment, training and lost skills can be timely and expensive.

Offering current staff training and up-skilling opportunities is one of the best ways to keep staff happy and motivated. More than that, having highly trained employees who are able to take on a number of roles can greatly reduce overall business costs.

Besides salary increases, employers are beginning to offer other benefits to stay competitive in the hunt for staff. Never underestimate the power of responsibility - you may think that by giving staff extra amounts of work, they’ll shy away from it but you’ll be surprised how responsibility motivates people. It can be as simple as alternating the organisational responsibility of staff parties – allocate a budget to one person and give them the freedom to plan what they like.

Pay bills early

Another great way to cut business costs is by taking advantage of the discounts many suppliers offer for paying their bills before the due date. Suppliers might only offer a small discount, but if you’re disciplined about always paying your bills before the due date, then this incentive will add up to significant cost savings for the business over time.

Time to renegotiate

The start of the year is a great time to renegotiate costs with suppliers. Why not talk to your courier, any specialist software providers you use and even your telecommunications or power provider about fee reductions they would be prepared to give you if you use them as a preferred supplier? The idea is to make a commitment to use their services over the course of the year, in exchange for a reduction in the prices they charge you.

Group buying sites

Buying in bulk can save a business owner massive amounts of money. However, if you’re a business owner who doesn’t have the capacity to order a lot at once, you may find bulk buying a struggle. By joining a wholesale group buying website, you can collaborate with other small business owners and save money.

When it comes to cost cutting, the idea is to be vigilant, and always be prepared to negotiate for a better price. As the saying goes ‘if you don’t ask, you don’t get’. So make sure 2012 is the year you negotiate on price for everything you buy, and always shop around for a better price when you need to make a purchase for your business.

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Business mindset - Why it is so Important ?

This article represents the views of the author only and not those of American Express.

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