Despite the recent market growth, a lot of businesses are struggling to remain competitive in today’s economy. There are a number of reasons why businesses may have issues staying afloat, but the most common one is high operational costs; overhead costs are often the culprit of lower competitiveness and difficulty in adapting to market changes.
Cutting costs is a great way to make your business more competitive and flexible. However, doing it wrong will lead to more problems that are difficult to solve. That is why, in this article, we’re going to cover some of the smartest ways to cut costs and stay competitive.
Review Your Inventory
Retail businesses are now competing with online stores for the same market segment. The fact that people shop more online than offline doesn’t help either. Setting up an online storefront can be a great way to win some customers back, but before you do there is one important task to tackle first: reviewing your inventory.
An inventory too large can quickly become a cost factor that hampers the business’s growth. Unless you are willing to push certain items more vigorously in order to clear them out of the inventory, you will often end up with items that are outdated, not really popular or difficult to sell.
Sticking with a small number of items that customers really want is the thing to do in this case. Superior Washer has been doing it with their catalog for years, offering fast-moving items such as standard flat washers and sticking to a particular niche. As a result, their inventory costs are relatively low and they can remain competitive while catering to a specific market.
Manage Non-Critical Costs
Another common problem found in today’s businesses is immense spending on unnecessary things. The costs of maintaining that coffee machine you have at the office or the many unnecessary travel expenses may seem like small expenses at first, but they quickly add up to a substantial portion of your overheads. Simply managing them better can help cut costs by as much as 20%.
I’m not saying you shouldn’t offer office perks to team members (and yourself). Being able to brew a decent cup of coffee at the office could mean fewer trips to the nearby coffee shop and increased productivity. That said, it is still necessary to control these costs to avoid waste and redundant expenses.
Modernize Your Marketing
It’s not unheard of for businesses to spend the majority of their profit on marketing, especially in the early days when a brand wants to get noticed. However, there really is no need to spend this much money. In fact, you can market your company on a budget while remaining competitive.
One good idea is to implement a referral program. Offer discount codes to your current customers who refer you to others. Another idea is to network. Attend events or join online forums and meet new people in your industry. Finally, take advantage of social media marketing, and do this in-house if you can. This is a cheap but effective method of marketing.
Be Smart About Your Equipment
Do you know that you can now rent printers instead of buying them? A lot of companies like Epson and Brother are starting to offer equipment rental packages, through which you can still get the best tools for the job without having to pay for maintenance and replacements. Through these service packages, you are basically paying for the cartridges or ink and not the actual printer and other overhead costs.
The same rental options are available for almost all equipment needed by businesses. In fact, a lot of startups are staying lean with the help of renting equipment rather than buying. Add this last tip to the previous cost-saving measures we talked about and it will be easy to lower your operational costs by more than 30%.