As the cost of living rises in Colorado, so does the cost of running a business. If you’re struggling to keep up, you’re not alone. Many business owners across the state face the same issues, especially after the pandemic AND inflation hit. Although it may feel like you’re being hit back and forth between a rock and a hard place, there are a few simple ways your business can cut costs and increase profit margins.
Hire an Accountant
Yes, this is an article about cutting costs, and I’m telling you to hire yet another person. If you don’t already, you need an accountant for your business. By giving your finances to a pair of fresh, professional eyes, they’ll be able to see where you are genuinely spending extravagantly. For example, you may think that you need to buy lunch for your employees every day, but if you want to afford them in the first place, you should probably let them pay for their meals.
Location
If you’re running your business out of a physical office, the rent may be getting a bit expensive. While you might consider negotiating the rent with the landlord, they also have bills to pay. So they are probably not willing to budge. However, if it’s possible to work from home in your line of work, you should consider doing so instead of renewing your lease. On the other hand, if you provide physical products and can’t completely move your shop online, you could relocate to a space with cheaper rent.
Outsource When it’s Cheaper
Outsourcing can be a great way to save a boatload of money on payroll costs. Plus, figuring out what you need to outsource is simple. For example, unless you’re an IT services company, you should outsource your IT needs instead of hiring an entire department. The same can be said for marketing and accounting.
Protect your Assets
Cutting costs also means reducing the financial risk you put on your business. So it’s critical to have substantial insurance policies that will protect your company in the event of a costly accident. Luckily, it’s relatively affordable to get reliable workers’ comp insurance in Colorado. Don’t forget to compare plan costs and make sure you have just the right amount of coverage, so you’re not wasting your money. If you underinsure yourself, you may regret it later.
Supply Costs
When you’re looking at your expenses, which supplies cost the most money? Can you get the same thing from a cheaper supplier? While cutting back on supply costs may not make the most significant impact right away, the money you save will make a bigger difference over time, making it well worth the effort.
Business Travel
Modern technology has made long-distance business more accessible than ever before. Plus, Covid-19 has proven that we do not need to travel for business meetings when we can hold them over a Zoom conference. By going virtual, you may save thousands of dollars on travel costs.
Plan Ahead
If you don’t keep up with supply and demand, you’ll develop a reputation for being unable to meet your customers’ needs. This is why inventory management is often an underestimated necessity. By utilizing data analysis and forecasting technology, you can plan ahead to predict future product sales. Therefore, you minimize the costly risk of overstock or low supply.
Time Management
Managing your time correctly should be one of your highest priorities. After all, time is money, as they say. If you run a service-based business, you understand that getting the job done in a timely manner is crucial for increasing profits. So the goal should be to figure out ways to improve productivity without compromising quality.
Reduce your Carbon Footprint
Believe it or not, going green can help you cut costs. There are even a few simple things that you can do for free to save. Here are a few examples of some ways you can reduce your carbon footprint and lower your utility bills at the same time:
- Keep the windows open when it’s sunny to use natural light.
- Unplug electronics that are fully charged or not in use.
- Use energy-efficient light bulbs.
- Shut off the lights when nobody is in the room or use automatic lights.
- Use automatic sinks
Conclusion
Part of increasing your profits is cutting costs. So it’s essential to constantly update your finances and keep an eye out for the most cost-effective business expenses. For example, an accountant is an asset for successful companies. Plus, on top of making sure you’re spending your money wisely, they also make your job easier. And you’ll save time and money by outsourcing some of your administrative needs. Additionally, you’ll make more money for yourself, properly pay the employees you need, and have a better work-life balance.
