Jumpstart with CPR started its "How to Series." For the upcoming episodes, CPR will research the most effective way to operate one's business optimally. Today, our post starts with "How to" Cut Costs within a Business. Learning how to save money and efficiently lead a business without wasting resources is a valuable skill. Regardless of the Business stage, a leader should seek ways to cut costs and save money. Within this series, CPR will present data on "How to," starting with How to Cut Costs.
1. Audit and build a forecast
Based on recent Zippia research, 22% of business startups fail in their first year due to cash flow problems. This can be easily identified with a solid business plan. Every business plan should have a financial analysis. The role of the CEO or CFO is to track the cash flow, monitor and analyze the strengths/weaknesses within your organization, and oversee all aspects of the organization's financial success.
Your goal at this stage is to conduct data collection. Then determine your return on investments. A simple concept to remember is the (1) cost/expenses and (2) revenue. Make a list of your current fixed and variable expenses. Then, see where you can cut costs and optimize.
2. Use technology to automate processes
Open-source, AI, and cloud technology can immensely help when trying to cut costs. Many accessible or affordable tools can help you automate and streamline different operations. Using technology wherever possible can help you reduce costs and move your business forward.
3. Fix your supply chain and ask for discounts
Carefully read and compare supplier contracts. Getting a better price from your supplier means cutting costs and improving the overall profitability of your business.
4. Outsource to reduce overhead costs
If your budget is tight, you could reduce the number of employees on your payroll by outsourcing, which may include global.
5. Explore alternative marketing strategies
If your budget doesn’t allow paid ads, think of out-of-the-box and low-cost ways to achieve a significant impact and exposure. For instance, growth hacking, guerilla marketing, and influencer marketing are all options to consider. Another great way to save on marketing costs with the long-term picture in mind is to invest in content marketing, SEO, email marketing, and community building early on. In the past, traditional marketing strategies like billboards or TV ads didn’t give you a way to capture data and metrics.
6. Downgrade subscriptions
Audit your subscriptions to stop overpaying for services. After analyzing all the services you pay for, cancel some immediately and realize you can significantly downgrade others. Another option is to save by getting annual instead of monthly contracts.
7. Perfect your stock levels-adopt an effective inventory tracking system.
Better inventory management means better finances, so optimize your stock levels.
8. Hire a tax consultant
Small businesses often overlook the importance of a professional guiding them through this area. A good tax accountant should bring you many benefits.
9. Buy refurbished furniture
10. Establish a workspace with other entrepreneurs.
Assuming the above recommendations for cutting costs should assist with reducing costs and saving money.