Cost reduction is a good way for your small business to effectively implement business process improvement. After all, implementing strategies and techniques that can cut costs result in immediate savings and, more often than not, long-term profitability. Thus, it is important to know that cost reduction can come in various methods, and is not simply limited to cutting staff numbers.

Sure, staffing is one of the things to reconsider when thinking about cutting costs. However, rent and capital equipment should also be taken into consideration. Here are some quick tips on how small businesses can easily cut costs without running the risk of losing your key profit indicators:

Assess your business

The first step is to identify which elements your small business spends on the most:

• Production

• Marketing and Advertising

• Financing

• Administration

• Facilities maintenance

Assess your profit and loss statement for a specific amount of time—ideally, for the previous six months. Rank all your expenses from highest to lowest to be able to identify the areas where you can reduce costs. What you can do is to prioritise the development of cost-saving techniques for areas where your business can receive the biggest return.

Separate business finance from personal finance

This is one of the most important moves business owners must take when starting up their own business. Finances that get intermingled can lead to disrupting your--and your business’s--cash flow. Keeping track of separate finances also helps you and your business come tax filing time. Organised books allow you to easily avail legitimate and legal tax deductions that ultimately result in cost reduction.

Implement quick saving techniques

• Identify unnecessary costs and eliminate them

• Focus on efficiency and productivity – ensure that your team members don’t waste time on manual tasks that can be completed easily

• Prioritise bulk ordering – small, frequent orders tend to cost more than large orders

• Negotiate with suppliers – find alternatives to high-priced resources and suppliers or try for better payment arrangements or discounts

You can also opt for more radical moves that may require your business to pursue extra research and studies to avoid potential damage to your business operations.

• Consider outsourcing to be able to cut payroll costs

• Develop new processes that enable your staff to eliminate duplication and avoid wasting time and resources

• Adapt to technology and innovation – try Cloud software that can cater to your business’s specific needs

• Consider sharing your office/workspace or relocating to a more cost-efficient location

These are just some of the many typical ways business owners can cut down on costs. It is important to note that the cost-control strategies that you develop and implement are consistently and carefully managed well. While eliminating costs is the main priority, do not forget that careless cost-cutting could lead to a drop in quality of service or product and lack of motivation when it comes to your staff.

Reduce costs without reducing your business operations’ efficiency, quality and effectivity.

Find out how your business can effectively reduce costs by downloading our free eBook now. You can also get in touch with our experts here at MyCEO to receive assistance in develop specialised cost-cutting strategies that fit your business’s specific needs and objectives.