When times get tough, you must do what they can to protect your cash flow to keep operations going. One way to do that is to cut your costs to prevent a decrease in revenue depleting your profitability. Here are five things you can do to reduce your business expenses.
1. CUT OVERHEAD WASTE
Are you paying for anything you're not using? Monthly software and app subscription fees, for example, can add up. So can subscriptions to trade publications and other industry research, reports, and other resources that don't add value anymore.
Now could be the time to examine all your expenses and cut anything that isn't providing a good return on your investment.
2. RESTRUCTURE YOUR BIZ
It's a good idea to assess the efficiency of your business structure and workflows regularly. Client and customer need change over time, so your service offering may have evolved in recent years, and new tech tools could unlock more efficient ways to run your workflows. As your business operations change, old structures may not be as cost-effective now as they used to be.
3. AUDIT YOUR SUPPLIER AGREEMENTS
Over-paying suppliers can hurt your cash flow. Talk to your long-term suppliers to see if you can negotiate more favorable deals.
Extending your supplier payment terms, for example, can give you more time to pay your bills. This could help to ease short-term cash flow bottlenecks. You could also ask your suppliers if they would consider offering a discount for early payments.
4. TRANSITION TO E-COMMERCE
If you're in the retail game, consider investing more in e-commerce. Moving as much of your sales online as possible could mean you'll be able to reduce the number of bricks-and-mortar stores you operate while maintaining your sales revenue. Fewer stores likely mean reduced overheads and a smaller workforce on your payroll.
5. EXPLORE OUTSOURCING
Outsourcing non-critical business processes to third parties could also help reduce costs. For example, using a virtual assistant service may come in significantly cheaper than employing a full-time personal assistant.
Using a marketing agency may also be more cost-effective than maintaining an in-house marketing department, and a chatbot service might help take some pressure off your customer service department.
There are only two ways to make your business more profitable: sell more or save more. When economic conditions make selling more complicated, it can be a good idea to identify where you can reduce expenditure to ensure your longevity.
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