When it comes to increasing profits, there are two main points of focus: increasing revenue and cutting costs.
Approaching your business with a frugal mindset can help you keep costs low without mitigating the value of what you offer.
Here are some inspiring frugal business changes to make this year for better profits.
Optimize Your Business for Mobility
Before the Coronavirus pandemic, many new businesses and start-ups were shifting to a remote or flexible working model. Now, businesses that were once fixated on the traditional set-up are re-evaluating their options. Optimizing your business for mobility can help improve employee morale, and dramatically cut overhead costs.
To make your business mobile, you need to put processes and tools in place for remote work. Ideally, your employees will be able to connect from anywhere at any time. Things like being able to send a fax from Gmail to ensure new customers get their contracts promptly or being able to edit a live document with a co-worker in a different location are key.
Look at how you can add streamlined connectivity throughout your business to be able to work from anywhere.
Use Freemium Apps
There are thousands of fantastic apps that are built for entrepreneurs and small business owners. Better yet, these apps follow a freemium structure that bridges the gap between free and paid apps.
What makes freemium apps so great? When you get started, you can use the free version of an app. As your business grows, you can scale up to suit your needs by paying the first tier of pricing. If your business outgrows the first tier, you can scale up again.
By taking this approach, you’re able to manage your expenses to be in alignment with your growth. There are high-quality freemium apps for everything, from team communication to project planning to social media automation.
Prioritize Value Over Cost
There’s a big difference between being frugal and being cheap. As a frugal business owner, you spend money based on value. When you’re cheap, you buy based on price. The problem with the latter is that you often get what you pay for— good or bad.
When you invest in your business, prioritize value over cost. It’s worth investing more for a tool that will help you generate more income. It’s worth spending extra for something that will last, rather than having to replace it in a year. Take your time when making purchasing decisions, but know when it’s worth spending.
Develop a Money Management System
Many entrepreneurs and small business owners fly by the seat of their pants when it comes to managing money. Beyond the income in, expenses out model, they rarely put a proper system in place.
Implementing a money management system can help you plan your expenses and get ahead of surprises. This approach allows you to make your expenses fit your business, rather than taking what’s left after the bills are paid. A money management system gives you the opportunity to set money aside to cover costs rather than incurring debt.
Outsource Instead of Hiring
There are a lot of underlying costs associated with hiring employees. Things like ensuring tax paperwork are in compliance and managing payroll comes with an opportunity cost: if it doesn’t cost you money, it costs you time.
Additionally, many entrepreneurs get stuck in the mindset of having to handle everything themselves. Outsourcing work removes low-value or time-consuming tasks from the equation, so you can focus on core business activities. Furthermore, outsourcing replaces the need for navigating the hiring process and incorporating HR functions into your business.
Take an Eco-Conscious Approach
Finally, take an eco-conscious approach to your business. Rather than focusing on cutting costs, consider how you can reduce consumption. For example, going paperless will drastically cut your office supply expenses. Incorporating energy-wise appliances and lighting will reduce your power bill. These small changes have a big impact on the environment and your bottom line.
With these simple shifts in business practices, you can make your business more frugal and profitable by the end of the year.