Boss Lady

4 Smart ways small businesses can cut costs

on


Any business can cut costs if they really want to, but that doesn’t always mean they should. The difference between cutting costs and cutting costs smartly is astronomical since the former is a move that’s centred on trimming costs in any way possible, while the latter is all about trimming the fat. For small business owners to avoid nearsighted decisions and cut costs intelligently, the following steps should prove to be crucial.

Work with freelancers and temps

Letting go of old employees is probably the last thing any business should resort to because of both moral and business reasons. It’s not smart to weaken a strong and cohesive workforce if you can help it. However, as far as hiring new employees is concerned, you should stick to freelancers and temps, for now, depending on the nature of your work. Putting anyone new on the permanent payroll may not be feasible for some time, but temps and freelancers can help you manage the extra workload, when and if required.

Cut down on your business energy bills

There are two main reasons why most small businesses in the UK spend more money on business electricity and/or gas bills than they should have to:

  1. They did not compare the rate/unit of electricity from multiple providers, before signing the contract
  2. Even if they did so a while ago, they have not checked and compared the new prices in a while

If any of that applies to your business, don’t forget to compare business energy prices before signing up for a new contract or renewing your present contract. Your current provider will require a notice in advance, stating that you are not willing to renew the contract. Get to know the regulations and submit that notice before they automatically pull you into paying the same or even a hiked price/unit again!

Shift to lean manufacturing and/or management

The idea behind lean has always been about cutting costs, reducing waste, and improving profits smartly, so it’s perfect for small businesses looking to shed some expenses. The principles of lean are as applicable in a large scale manufacturing operation as they are for a private dentist, so just try to understand the philosophy behind lean, instead of blindly copying Toyota or any other MNC. The principle ideas can be summed up as:

  • Eliminate steps from every process, if it can boost productivity without affecting quality
  • Eliminate expenses that do not justify the outcome
  • Reduce waste by manufacturing only what is expected/ordered by your customers/clients
  • Establish a proven strategy for managing processes, standardise it and keep it unchanged for a significant time period
  • Gather intel, opinions, and analytics on possible ways to improve the standardised procedure, but don’t implement anything right away
  • Formulate, test and verify the efficacy of the new strategy/standard with small tests, before replacing the current standard of procedure

Go digital

Right now, most of us don’t have much of a choice in the matter, but once the quarantine is over, don’t abandon the idea of working from home immediately. See if you cannot cut down on the cost of rent by shifting to a smaller office and keeping most of the employees working within a remote, cloud-synced environment. London, Bristol, and other major cities in the UK are infamous for their high rents, so going as digital as possible will allow you to shave off a chunk from monthly expenses.

Bad as it is right now, the pandemic will pass eventually. However, the massive economic impacts will be felt for years to come. Now more than ever, it’s time to consider cutting costs in a smart way, especially for small businesses. It doesn’t have to be as bad as it sounds though if you prepare for things in advance and keep these tips in mind.

About Joniel Suezo

joniels@thebusinesswomanmedia.com'

Joniel Suezo is an outreach specialist at Smashdigital, and hardworking mother of two – keen to get ahead and see other women do the same.

Recommended for you