Are you wondering what are the ways to cut business costs? Need to shave some business costs to make your new startup idea viable or keep your current venture afloat?
Starting a business doesn’t have to be as expensive as you imagine. If you are already in business and need to grind it out until a new startup funding round comes through or you get paid on invoices, here are some of the ways you can do that, and keep on working smarter in the future.
1. Shed The Office Space
The recent massive failure of WeWork really says it all. Physical office space has been on its way out since the Great Recession. The world of work is different now.
We shouldn’t really need an enormous failure which cost investors tens of billions of dollars to see this. Even brick and mortar retail shopping are probably more secure than the office. You don’t have to search too hard to see how hard physical retail has changed. Even on famous strips like NYC’s Fifth Avenue.
Billion-dollar companies can be built and operated just fine without insisting on relocating everyone and forcing them to clock in and taking on such a lavish amount of overhead and unnecessary risk.
Unless you really can’t work from home and need a coworking space subscription or a small one-person office space to focus, you probably need zero office space and its related fixed costs.
2. Embrace The Cloud
When thinking about ways to cut business costs go with the cloud for everything. There’s really not much you can’t do in the cloud.
Forget printing paper and killing the environment and then needing storage space for it. Choose online document storage. Collaborate on files in the cloud. Run project management on web-based software so you can cut out meetings.
Use video meetings in place of flying and driving and all the related costs.
3. Reduce Staff Downtime
The above is a good start, but there is a lot more you can do to reduce staff downtime and wasted labor dollars.
Axe meetings altogether. Empower your team members with decision making authority. Even if they give away $500 to make a customer happy that you wouldn’t have, you will have saved more than if you had a company meeting about the choice.
Recruit and sandbag talent far in advance. You will make better choices. You won’t be paying rush rates. You won’t be paying team members to sit idle while you try to hire someone to fill in a gap and fix something they are waiting on.
Automate pay to stop wasting your time, payroll labor dollars and stalling projects.
4. Hire Smarter
If you are at the point of analyzing ways to cut business costs hire remote staff and independent contractors. It will slash your overhead and exposure to the risk of lawsuits.
Prioritize hiring remote talent in more affordable locations. If you hire remote workers in Ohio, Florida or Alabama, you might pay them the same as in San Fran or NYC, but they’ll actually be able to afford an apartment, will keep more of their paycheck, be a lot happier, more likely to stay and will be comfortable enough to do their best work.
5. Prove Your Theories Before Making Big Bets
This is especially true in advertising and marketing. Test and tweak and prove performance before blowing large amounts of your last funding round speculating about what works.
Know that you do have to do large enough tests for long enough in order to really know this. Though make sure you hone it before you try to scale it.
Inventory can kill you faster than most other factors and certainly should be one of the most important factors when considering ways to cut business costs. Certainly, something you would want to include in your pitch deck.
You don’t want to be sitting on excess inventory or sit on inventory for too long. There are industries where there are millions of dollars in idle inventory that have been sitting there for years.
Try moving to a just in time or on-demand model. Even better, have customers paying to cover the manufacturing and shipping costs in advance.
7. Build The Audience First
Before launching a new product, features, or opening a new store, build your audience first. Build the audience so that you have a large pool of immediate customers who will pay for you to hire the best team to execute on delivering it.
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