We are already in the third month of 2023! This year may already be proving to be challenging for many businesses – with continued loadshedding, spiraling inflation and the after effects of the Covid-19 pandemic still present, it doesn’t seem like things will be improving in the foreseeable future. Meaning, now more than ever before, businesses need to look at ways to increase their revenue whilst making changes to drive their total costs down.
In this blog we explore some simple ways businesses can effectively lower their costs this year and going forward. Some of the suggested changes may seem to rather increase costs to businesses, but in the long run they will work out to be more cost effective and aid in the success of your business.
STICK TO YOUR BUDGET!
This may seem so oblivious but can be the very reason business find themselves in trouble as the year progresses. Successful businesses are those that diligently track and manage their budgets. Instead of working from a static one that is drafted at the beginning of the year – budgets need to be dynamic and evolve with the ever-changing business environment that the year presents.
With careful budgeting, businesses will be able identify opportunities for saving and areas where the business is not properly focusing its spending. It also reveals areas where organizations can achieve long-term savings that they had previously not thought about.
LOOK AT THE BIG PICTURE!
Business owners often become obsessed with nitpicking each and every business expense, no matter how insignificant it may be as a whole. In many cases, the first thing businesses do is cut out employee perks, seeing it as a quick and easy way to reduce company costs. Although these costs generally represent only a small fraction of the business budget – the effects of cutting them out can have significant repercussions for businesses by negatively effecting staff morale and their productivity. Understandably employee expenses do need to be controlled, but businesses should be looking at the bigger picture when it comes to cutting costs and find ways that will see a higher total impact on cost reduction. This may be something along the lines of renegotiating vendor contracts or looking at doing away with long term leases (which eat up a lot of the budget) and moving to shorter, more flexible leases where hybrid working becomes an option.
OUTSOURCING FOR EFFICIENCY!
This applies largely to SMEs that simply don’t have the resources to staff every department. These businesses, rather than try to do everything themselves, should consider outsourcing certain roles. By outsourcing functions like Accounting, IT, HR and Marketing – these specialized firms can efficiently handle the tasks, which in turn limits internal employee expenses and time, and enables employees to focus on their primary roles within the business. This will aid in overall productivity and in profit.
By not hiring extra staff to perform these functions, businesses can cut down on costs – as by outsourcing you are only paying for the time spend on a project and not a full monthly salary.
IT’S TIME TO GO DIGITAL!
This is a change that initially looks to put pressure on the annual budget, but it is one that will be far more cost effective in the long run. Digital transformation is an investment that contributes to long-term savings. It has the ability to increase a business’s productivity, efficiency and helps businesses more effectively meet compliance obligations. Many SMEs may feel that the upfront cost to digitally transform the business is more than their budget allows, but it is something that they are able to scale as the business grows, and add options to when the time is right. Ways in which digital transformation can help businesses is by:
- Automating business workflows. This reduces the amount of time employees spend on repetitive tasks, ultimately enabling employees to focus on more revenue-generating work.
- Facilitating online payment processing and collection.
- The transitioning of infrastructure and IT services to cloud providers reduces the need for IT staff, as well as infrastructure purchase and maintenance costs.
- Facilitate the transition to remote, hybrid working arrangements – which help replace business’s physical premises with less costly virtual services.
BE ON POINT WITH GENERATIONAL TRENDS!
Looking to the younger generation within any business gives an insight into the needs and desires of that market and can greatly aid in business opportunities to optimize spending. One example would be their preference for remote working, but another impactful one has to do with business marketing. Traditional forms of marketing (print, radio, television) is a costly form of advertising, but one that has be used effectively for generations as the primary source of advertising. However, cheaper digital marketing options are now available, and these forms of marketing are more appealing to the younger generation. Clever digital content marketing, using strategic campaigns can be used to directly target a specific market, seeing very high-returns, driving up company revenue.
If businesses haven’t already, it may be wise to look at your marketing budget and allocate the spend in a way which will best suit the needs of your intended audience.
In conclusion, although it is necessary to manage daily and monthly business expenses, it is important to look at the big picture and implement changes that will have big impacts on how you are able to save, as well as how you can grow your business from strength to strength. In the game of business, it is not a sprint, it is a marathon, and the practices and best business processes that you put in place will ultimately see you reach the line. Take some time out of your day to sit down and visualize where you would like to see your business in one year/five years/ten years’ time – then think about how you are going to make it happen…
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