There will be a plethora of money experts talking about cost savings online. However, when running a business, some costs are not as easy to cut as you think. Compromising on quality can drive valued customers away and the cost of getting them back could be far more. So, it might instead be time to consider targeting a new segment of customers and rising your prices.
Either way, it can still be a very valuable exercise to do a mini-assessment to make sure you are getting the maximum bang for your buck.
Where to start?
When it comes to overheads you should once a year do a bit of shopping around. You may set this review, around key periods when companies do deals. E.G. Cyber week in November or New year deals in January. That way you may find savings with insurance, utilities, and other services.
Or as is often the case, your current supplier might offer a better deal, if you ring up and say you plan to move your account. If you don't threaten to leave, they won't be proactive to offer you a better deal.
Do you have to travel? Can the meeting be done remotely, or can you plan more strategically to pick days to pack in a few meetings in a central location?
Marketing and Advertising
Depending on the marketing services you use and the analyses you can gather, investigate which advertising platforms are working best for you. Divest from those channels that are not giving you an ROI and increase spend on the channels that are working. Assess this every month if you can. Or at least quarterly.
Do weigh up the pros and cons of outsourcing marketing services, if you are finding it hard to dedicate the time to get the most out of your advertising spend. You may find you get a better return overall, by outsourcing and you can dedicate time instead to product and customer service improvements, etc.
Look at the subscriptions you have. Do you need them? If you have recently outsourced content and graphics why do you still have a subscription for photoshopping if you are not planning to use it?
Bank and interest costs
As interest rates are increasing, what can you do to reduce loan financing costs? Consider paying off lump sums to reduce your interest costs.
You can also look at your terms of trade. To reduce your reliance on overdrafts - can you ask clients/customers to pay in 20 days instead of 30 days for example? Are there some Suppliers you can ask to move from 30 days to 35 days to pay them? That way helps to improve your working capital (cash flow). These days are only for illustrative purposes, but look to see what you can do.
Also, new year, new process, don't be afraid to look at stage payments or deposits to boast your cash flow.
This can be more tricky, as suppliers are facing greater pressure on their costs. You don't want to compromise quality as this can result in false economies. So, work with suppliers to see if there are any economies by increasing your order quantities (if your cash flow can manage this). And don't shy away from increasing your prices within reason.
Or charge for postage, if you have been absorbing these costs. Also, consider better controls around returns. For example, labels that go around garments, so that they cannot be worn to an event and then returned the next day!
There is nothing wrong with second-hand equipment. The same applies to fixtures and fittings. There are websites like Freecycle, so don't be afraid to get creative with repurposing tables, storage, etc.
You can rent/lease equipment and get into sharing arrangements with fellow businesses. Make sure you communicate and work with your business community to help each other out.
Finally, if you see something flashy, sleep on it and get a second option. Just because someone else has the newest computer, does not mean you need it for your business. Avoid impulsive purchases (easier said than done, but try to avoid online shopping after 10 pm :)).
Make sure you stick an hour in your calendar or even a reminder on your phone, to dedicate some time to reviewing your costs. The investment of your time could pay dividends.
Build up peers you can bounce ideas off and for the love of god, do your monthly accounts. With the likes of Xero/Quickbooks, there is no excuse not to see what you have been spending. It is 10 mins a day to reconcile your bank accounts. It is not until you see the year-to-date totals for certain categories do you realise, you need to reign things in. Or strongly consider price rises or letting go of products/services you should no longer produce/sell.
Finally outsourcing. It is tempting to think you need to hire people in-house to help you out. But it might be that you are a year off from being able to afford this resource sustainably. It is not just the cost of wages but the time you have to spend training and managing this person.
It could be that you need to get a fulfillment company instead to help with orders and not an extra pair of hands in your spare room. Work out the costs of options.
It might be that using websites like Fiverr. To source services while you plan out your long-term hiring strategy to scale your business.