The New Year has officially been ushered in and with it the beginning of quarter one of the financial calendar. New Year’s resolutions aren’t restricted to individuals, as businesses vow to cut costs and raise revenue throughout the new year all while keeping the momentum from the holiday season. However, finding success over the length of quarter one can be difficult, as the consumer base typically tries to reduce spending after the expensive holiday season. This leaves businesses with one clear option to improve profit margins, cutting costs. Cutting costs can be tricky, as it needs to be done in a way that doesn’t overly affect the product or service that your business offers. However, there are a few key elements that can help your business cut costs while still maintaining your customers. Here are five keys to trimming costs over quarter one.
Transportation Costs
Any business that has company vehicles or uses some other form of transportation has several options available to them to reduce costs. Vehicles can be purchased used for a much lower price than their current retail value and typically have a similar amount of effectiveness when compared to their newer counterparts. In addition, try purchasing vehicles with a higher fuel economy in order to save money on gas prices. Also, ensure that your vehicles are only being used when necessary and are taking the most efficient routes possible in order to cut down on travel times and gas prices. Finally, when your company vehicle’s usefulness has reached its endpoint work towards trading it in or selling it so you can put the funds towards a newer more effective vehicle.
Increase Efficiency
Sometimes cutting costs isn’t about cutting certain areas of your business, but instead allocating your time more efficiently. This could be as simple as ensuring your employees stay on task or making sure that transportation and delivery times are efficient. You and your employees should always be doing something productive in order to squeeze the maximum amount of productivity out of the business day. Some days business is slow and it may seem hard to allocate your time in an efficient manner, but even on those days, people need to be productive in order to improve the business as a whole. Try setting stricter goals and making set schedules to stick to in order to increase the overall efficiency of your workplace.
Marketing Costs
Marketing is very important to a business’s success, so cutting costs in this area may seem strange at first. Unfortunately, not all marketing campaigns are created equal, and some struggle to give you the lead generation that you desire. These underperforming marketing campaigns could have failed due to your business misreading your target market’s wants and desires or simply because it was done on the wrong platform. Regardless of why a marketing campaign might fail, you should cut your losses and terminate them if they are not performing up to the task. You should be constantly monitoring the effectiveness of your campaigns, and if one isn’t performing up to the task you should terminate it in order to allocate the funds in a more effective manner.
Labor Costs
The idea of cutting labor costs isn’t particularly well received by either the employee or the employer, but sometimes it is a necessary evil. The employee typically isn’t happy because they are losing valuable pay and work experience, and the employer isn’t happy because they are losing productivity that could be helping the business. However, if business and sales are slow then employers may ask employees to take some unpaid time off or a lower wage. If the business isn’t forecasted to improve anytime soon, then employers may even layoff some employees permanently. While this can drastically reduce labor costs, it has the negative side effect of reducing your business’s overall productivity. In addition, those employees that you do retain may take a hit to morale, as they wonder if their job is the next to be cut.
Location Costs
The costs of your business’s location can be pretty steep for businesses, especially those that are smaller in size. Most businesses today rent out their locations, and if not handled carefully rent payments can get out of hand. Businesses should assess their location and compare what the location has to offer the business to what it is costing them. If you feel that you are paying too much for your business’s location, then search for a more suitable location that offers similar benefits but at a lower cost. If you’re not careful, then rent and utility payments could put your business and financial ruin and have you searching for federal bankruptcy exemptions.
These 5 keys mentioned above can help your business cut costs while still maintaining your customers and improving your profit margin.
