Statistics also reveal that the number of businesses going into administration is increasing. According to the Australian Securities and Investments Commission, the number of businesses going into administration has grown by 11.2%
since last year, as found by the ABC. To add to the stress, along with struggling to make ends meet, businesses are often confronted by debt collectors and sometimes forced to close. If you’re in the jewellery, perfume, or entertainment industry, you’re most likely the most affected by these struggles. Overall, retail as a whole is facing hardship. In September, the retail industry saw a drop in turnover of 0.1%
, and while it’s regained itself with a rise of 0.2%, this figure is still rather unsteady. So, what can we do when sales are compromised? This is where business strategy comes into play.
Although Christmas is a valuable time of year for many, and a sudden surge in sales makes you feel like all of your business troubles have disappeared, the New Year is just around the corner and stands as a troubling reminder of financial hardships. After all the tinsel and confetti has finally landed, unfortunately, you’re still in the same predicament. So, how do you recover from financial troubles from the previous year? Well, it’s all about cost reduction, cost reduction, cost reduction. So, knuckle down and put some of these saving strategies to the test.
1. Cost-Cutting with Marketing Efforts
Thanks to digital media, any business has the means to market themselves, even with very strict budget constraints. Want to spend only $100 a month? There’s a strategy out there for you. Undeniably, the easiest way to cut back on advertising is to drop traditional media and opt for low-cost digital alternatives.
The average cost of a digital marketing campaign in 2019 is between $2500-$12,000 per month
per small to medium business, depending on the strategy and services needed. On the other hand, with traditional media, for a TV ad alone, you’re looking to pay $342,000 for a 30-second video
—and that’s per ad shown. Obviously, digital is the cheaper option.
Still don’t have it in your budget to start an ongoing digital campaign? Don’t stress. Utilise the highly ubiquitous power of social media. Start by making content, which can be easier than you think using free resources like Pablo
(and a bunch of other tools that are a simple search away).
2. Outsource and Save
Employed staff need salaries, space to work, superannuation, and insurance. While having a large team of staff is helpful for busy periods, it’s also a huge expense. You will save yourself a great amount of money only keeping the minimum number of full-time staff (the essentials) and employ contractors required to take on routine tasks. Other tasks which are a bit more casual in nature can be outsourced. Try sites like AirTasker
to find skilled workers for an affordable rate.
One department many businesses typically outsource is the accounting and bookkeeping department. No doubt, having an internal accountant or bookkeeper is handy, but it’s also very expensive, and it’s the easiest department to outsource. On the other hand, to save even more, you could also consider DIY-ing your bookkeeping tasks. If you’re tossing up whether you should DIY or hire a bookkeeper, read our guide
to help you decide.
3. Save the Planet While Saving Cash
It might surprise you to hear, but being more environmental can help with cost reduction. To get started and saving, implement easy energy-saving strategies around the office to save electricity. Turn off appliances if they are on standby mode (like TVs and monitors). To take the extra step, modify appliances and fixtures in your office to energy-saving alternatives. For example, switching standard incandescent light bulbs to LED bulbs saves energy and therefore cuts down the power bill. LED lights use 75% less energy and last up to 25 times longer than an incandescent light.
Another commodity worth saving is water. Fix any leaky faucets to save water—and money—going down the drain. Finally, if you’re in need of an office upgrade and are looking for new tech, you should consider trading in your old computers and devices for new equipment. There are companies that will buy and refurbish old tech to sell onto customers, meaning devices are recycled and not lost in landfills. Want to know more about how this works? Click here
4. Create Internship Opportunities
Students and graduates are itching to get work experience. So, why not give them experience all the while reaping the rewards of having an extra employee on hand? Although there might be some processes you may have to teach them off the bat to get started, after a little settling in, they’re just as reliable and resourceful as a paid employee. Most of the time they’ve got the theoretical knowledge, they just need someone to show them the practical side of the business. As a bonus, you may find someone who is indispensable—in this case, it’s worth keeping them on as staff or freelance workers.
5. Bulking up to Shed Expenses
Sometimes cost reduction involves spending more initially. Buying office supplies in bulk from online retailers can save you money in the long run. As office equipment has the tendency to disappear or get used up quite fast, it makes sense to stock up on high-use equipment and replace them less often.
6. Shop Around and Negotiate With Your Vendors
If you’ve been doing business the same way for a long time, you may feel less inclined to change things. Using the same suppliers, manufacturers, retailers, distributors, and so on, might mean missing out on better deals. Shop around for a better price and don’t be afraid to call up your vendors and ask for a discounted price for years of loyalty. After all, what’s the worst that can happen? They’ll say no?
7. Travel Less, Save More
Travelling from place to place is undeniably one of the perks of business; however, it’s also a very costly operation. From the added car expenses (to the company car or your personal car) like repairs and services to petrol prices and insurance, travelling from A to B takes a financial toll (on top of many road tolls too, we’re sure). Then there’s the toll it takes on productivity. Driving out, unless necessary, detracts from time that can be spent working. Instead of travelling, utilise new technologies to see and talk to people—use Skype
, or an alternative video chat, for face-to-face calls, and use conference calls to speak to multiple people at once in scheduled meetings. There’s also the good old fashioned phone conversation too.
8. Try Telecommuting
To take it a step further, you could try telecommuting, or in other words, working from home. While it sounds too good to be true. telecommuting is an increasingly popular business strategy, especially for cost reduction. Telecommuting can improve productivity (with fewer distractions at home), reduce time and money spent commuting on roads (which also reduces our carbon footprint), and help employees establish a work-life balance.
9. Implement Time Management Strategies
As the saying goes, time is money. So it’s a good idea to know how it is being utilised to complete tasks. Are there tasks that lead to a lot of procrastination? Perhaps they need to be broken down into smaller tasks. Are there hours of the day that are simply unaccounted for? Then that definitely should be addressed. The simple solution is to use apps and software. Time management software such as Toggl
tracks time spent on task to formulate reports—this can help businesses identify any trouble areas if there are any. If the issue isn’t time but rather the organisation of tasks across departments, then a project management tool like Basecamp
can help. Basecamp helps teams from varying departments organise and complete tasks, all the while keeping each other in the loop. Ultimately, streamlining business tasks helps an office run more efficiently and productively, maximising every hour of the working day and every dollar spent.
10. Change Plans and Reduce Expenses
How many plans are you juggling at the moment? Are they proving worthwhile? Or are they a massive waste of money? Just like arrangements you’ve made with your vendors, you may feel inclined to continue paying the same price for your plans out of complacency. We know, it takes time and effort to shop around, but every dollar spared per month adds up in the long term. Review your phone, internet, cloud storage, and bookkeeping software plans. Call your phone and internet provider to ask for a better rate in return for staying with them. Otherwise, shop around for another company. Don’t be afraid to switch to a smaller provider with a better deal—as a tip, always check google reviews to guide your decision.
Want to know more about which bookkeeping software program is the best for you? Check out our comparison of MYOB and Xero
, the two top accounting and bookkeeping systems online.
Did we miss anything? Leave your best cost reduction business strategies in the comments below. If you’re wanting to know more about how to recover from a business setback, check our article here
. On the other hand, if you’ve picked yourself up and are ready to thrive, read about the four habits
we’ve identified in all successful business people.
And finally, from our team, have a Merry Christmas and a Happy New Year!
Shoebox Books was developed to help small businesses grow and succeed. Working across Australia, Shoebox Bookkeepers work to help businesses manage their finances and yearly tax returns. If you’re in need of bookkeeping services, contact