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After the global pandemic, business owners will have to focus on increasing sales and lowering cost, unfortunately, eight out 10 SMEs fail within the first 18 months, says Bloomberg. In this post, we’ll share with you 60 effective ways to cut business expenses in Nigeria.
As a growing business, cutting down cost on basic business outlays without compromising quality is a good way to upsurge your margins.
Profit margin is a simple mathematical equation that is determined by two factors: revenue and expense. To achieve higher margins, you basically have two choices; you either increase your revenue or reduce the expenses.
In an economy filled with uncertainties, where every penny counts, even the smallest growth in revenue or drop in expenses can have a noticeable impact on the profitability of any business.
The more you are able to cut off your business expenses, the better off your business will be, and the more you’re able to manage challenges in your business. The savings can be used to keep your business afloat, enlarge into new ventures, or increase your bottom line.
As a small business owner, you can start a small chicken rearing business at the back of your house to augment expenses.
So, what are the ways to reduce costs in the workplace, in a world which has been changed by the ravaging effects of coronavirus?
60 Cost Cutting Ideas for Large and Small Business in Nigeria
- Encourage Telecommuting
- Limit Travel Expenses
- Outsource whatever your company’s weakness
- Cut down on meetings
- Keep Salary Costs Down
- Buy used equipment
- Outsource Bookkeeping processes
- Embrace Technology
- Save On Utility Costs
- Reduce waste and improve team efficiency
- Take advantage of travel reward credit cards
- Use word of mouth marketing
- Hire freelancers
- Cut production costs
- Use online free tools
- Less Printing
- Operate Proactively Not Reactively
- Negotiate Better Prices
- Save electricity
- Reduce Paper Use
- Modernize your marketing methods
- Reduce Cost of Financial Services
- Buy bulk office supplies
- Less traveling
- Consider Letting Employees work remotely
- Outsource customer service jobs
- Freight and packaging
- Legal fees
- Four-day work week
- Reconsider maintenance
- Sponsor your events
- Barter with businesses
- Invest in energy-efficient appliances
- Stop using the landline
- Outsource your HR department
- Embrace A Remote Work Environment
- Pay Your invoices early
- Reduce inventory levels
- Use internet marketing
- Hire interns
- Automate time-consuming tasks
- Use free cloud storage services
- Look for insurance discounts
- Utilize working space
- Keep track of tax write offs
- Review expenses regularly
- Outsource administrative task
- Outsource software development
- Outsource your IT operations
- Void or reduce perpetual payments
- Reevaluate complex expenses
- Outsourcing Lead generation
- Usage of efficient time strategies
- Outsource payroll processing
- Focus on quality
- Cut superfluous expenses
- Hire temporary workforce
- Make sensible health care changes
- Invest in your employees
- Avoid interest at all costs
Of the above cost-cutting expenses in office, we’ll briefly discuss 10 of them to help make adjustment as you strive to take your business to the next level.
Keep Salary Costs Down.
In as much as you employ highly qualified and scrutinized freelancers, you can save a bundle over employing full-time employees. Just ensure that you interview prospective candidates correctly, and let them know what’s expected of them.
This is much better than employing full-time employees, and you can save on payroll expenses as well.
Negotiate Better Prices
If you regularly work with merchants and suppliers, negotiating good prices can have an incredible effect on your expenses. Ask your supplier if a renegotiation is likely, and if they refuse, re-approach them with quotes from other suppliers.
By saving a few cents on every item you sell, you can decrease expenses and increase profits, significantly.
One of the ways business owners can cut business cost is by reducing printing. It may be unnoticeable, but the fact is that printing requires a lot of resources like ink, cartridges, says outsourcinginsight.com
Reduce waste and improve team efficiency
Understanding how to take full advantage of your groups’ competence is a good way to cut down expenditures. The unique thing about this approach is you don’t have to cut back and put the business growth at risk.
You just need to discover ways to allot resources in a proper manner and put people in posts that make the most of their talent. This can reduce costs as your team members will be more useful, meaning that better quality work will be done in less time.
Save On Utility Costs
Reduce the consumption of all utilities such as electricity by turning off unused office equipment after work hours, weekends and on holidays.
In general, cut down on the cost of heating, cooling, and lighting your working area. Use energy-saving office equipment to lessen electrical usage.
There are numerous online systems and software programs that can preset both essential and non-essential business functions that will save you a lot of resources. Most remarkable illustrations of these are integrated payroll systems, electronic invoicing & accounting systems, and cloud-based collaboration platforms.
Reduce Cost of Financial Services
Rather than engaging a group of accountants and finance officers, you can advance your payroll productivity by integrating payroll software into your business processes.
In due course, it would help you to make good savings on employee salaries when compared to subcontracting it to a service provider.
Operate Proactively Not Reactively
On a higher level, assuming a pre-emptive rather than a reactive attitude can considerably increase the state of your business. Proactive establishments are continuously analyzing, evaluating, and optimizing their performance with respect to their business environments.
Embrace A Remote Work Environment.
Businesses can save cost by permitting employees to do their work remotely. It offers them a better work-life balance.
This aids businesses in saving money on hiring and training of new employees (because it improves employee retention, and also on costly office setup (instead of making use of co-working spaces) which enables you run a lean business.
Use internet marketing
This is one of the ways to control expenses in a company. Through search engine and social media, you can generate traffic t your side instead of spending millions on TV ads or billboards.
For instance, Facebook, Twitter, LinkedIn can fetch you leads, they are much cheaper than TV or billboards.
Most businesses around the World have attested the impact of COVID-19, however, they should employ the most efficient way to cut down expenses and operating cost.
Are you presently paying monthly for a SaaS tool that you are not making use of? Are you paying a huge sum for internet access? Are your employees being used to their fullest capacity?
These are the kind of questions you should consider answering on a steady basis to ensure you are keeping your expenditures and operating costs in check. When you find unnecessary costs, do away with them.