In a decade that began with widespread commercial lockdowns and a faltering economy, how are entrepreneurs surviving? The good news is that the pandemic is officially over, and the lackluster financial situation won't last forever. Plus, creative business professionals and owners are meeting the challenges of a not great situation and forging ahead. The most deployed tool in their arsenal is the ability to cut expenses in several areas. Every accountant and financial analyst understand that cost minimization is the only alternative for owners who have no room to increase sales and profits.
But what are diligent adults doing to root out line-item expenses and save money every chance they get? For large numbers of principals, the first option is to shrink the size of company offices. Others choose to hire independent contractors instead of using employees for standard operations. Fleet managers concentrate on purchasing vehicles based on specific needs. Other cost-cutting efforts involve inventory, outsourcing, commercial credit, and advertising. There's no one-size-fits-all approach. Indeed, many company leaders employ a combination of techniques to bring total expenses down by a substantial margin. Here are some of the ways they do it.
Resolving the Office Space Dilemma
The COVID pandemic led millions of consumers and business owners to rethink their use of office space, particularly large commercial buildings that tend to come with high lease rates and excessive utility and maintenance bills. During the lockdowns, workers, and managers quickly discovered that they could get by with minimal leased space and a team of home-based employees.
You can get big results in small office spaces but many entrepreneurs simply closed out their rental contracts and moved operations to their homes. Even after the threat of COVID was over, large numbers of owners and solo practitioners chose to remain at home to save on rental expenses. In 2023, telecommuting is the rule rather than the exception for vast groups of financial professionals who are employed by banks, accounting firms, and insurance companies.
Buying Efficient Fleet Cars & Trucks
Every commercial fleet is unique, which means purchasing new vehicles can be a major chore for supervisors and managers charged with overseeing daily operations. Anyone who maintains a fleet of company vehicles needs to know how to shop for replacements or add-ons when customer bases grow and there's a fresh demand for more wheels on the road. What's involved in the acquisition process?
In addition to researching and test-driving numerous candidates, commercial buyers must choose trucks, cars, and vans that meet the company's needs in every respect. Performance is a core factor in the decision-making journey, as it can have a profound effect on bottom-line profits and company productivity. The best first step is to review a complete guide that describes the purchasing process in detail and explains every step a person should take when acquiring a vehicle for their company.
Hiring Employees vs Indie Contractors
The age-old question about whether it makes more financial sense to hire employees or independent contractors has never been resolved. Individual owners find their own way based on dozens of factors and unique circumstances. For organizations feeling the pinch of inflation, supply disruptions, and volatile consumer demand, going with independent contractors can make sense. Indies offer owners flexibility when it comes to meeting seesaw demand, seasonal market fluctuations, and numerous other scenarios. While per-hour expenses can be higher than for direct hires, there's no need to provide retirement or other major benefits for independent workers, which can translate to substantial savings.
Making Wise Outsourcing Decisions
Outsourcing is an art. Overdoing it can be a costly mistake. Neglecting to send out a particular task can also lead to higher-than-normal expenses. What's an owner to do? The first step is to make a detailed outsourcing plan, complete with financial estimates of how much savings can result from each outsourced job. Then, the best way to proceed is to test one thing at a time, usually beginning with the most obvious choice, like payroll or IT security.
The general rule is that it's safe and profitable in most cases to outsource a function that you can't do in-house with current staff members. The second phase is to shop carefully for service providers when you do decide to send a job outside the company's walls. Get references, do online research, ask for trial periods, and don't sign any service contracts until you are fully confident that the provider is reliable. Joining a local Chamber of Commerce is a good way to connect with trusted third-party providers in nearly every field. In fact, that's one of the main reasons people join chambers. The whole point is to make professional connections with competent companies.
Establishing Business Credit
One way to keep costs down is to maintain an excellent credit rating. For startups and individual proprietors, just getting a favorable score can take some doing. Step one is to work with one or two vendors and arrange a small line of credit with the vendors reporting to the three major credit bureaus. Within about six months, assuming the entrepreneur makes payments on time, the business can begin to show up on the financial radar as a reliable payer.
Once a decent rating is established, taking out a small commercial loan from a bank is a second step in the process of building a favorable financial footprint. After that, a company can usually borrow at reasonable rates whenever the need arises, thus side-stepping high interest from lenders who specialize in distressed borrowers. It's imperative for business leaders to understand that they can achieve substantial savings on interest charges by working to build a high commercial credit score.
Strategizing About Advertising
Marketing and promotion can be tricky because reducing the advertising budget can lead to slower sales and lower income. That is certainly not the goal of cost cutting programs. However, smaller businesses can outsource some of their promotional campaigns to third-party providers or ramp up their social media marketing. It's essential for startups and newer organizations to test as many DIY (do it yourself) promotional strategies as possible. Trial and error are the wisest technique for identifying the least costly methods that deliver acceptable results in terms of generating sales.