Slashing business expenses is an effective solution for boosting profitability and resolving cash flow issues. It comes in handy in various situations, including hard financial times, during high inflation, and in crowded marketplaces. Businesses can also prioritize cost-cutting when implementing a growth plan. Nevertheless, lowering business costs without reducing product/ service quality, minimizing output, or asking some employees to take on lesser work isn’t easy.
Cutting costs without letting part of your staff go is even more challenging. Luckily, employing the right tactics can help you take control of your expenses. Discussed below are six tips to cut business expenses.
1. Save on fuel costs
Fuel expenses are a significant business cost, especially for companies with heavy machinery or vehicle fleets. Controlling and minimizing fuel costs helps competitiveness and profitability. Here are a few solutions your company can implement to save money at the pump:
Adopt fuel-efficient driving techniques
Educating drivers on fuel-saving driving tactics can have a major effect on your business’s fuel costs. These techniques include:
- Anticipating stops: Anticipating stops and decelerating gradually can help save fuel
- Avoiding excessive idling: Discourage drivers from keeping their engines on when waiting for long periods or parked
- Gradual acceleration: Unlike gradual acceleration, rapid acceleration uses more fuel. So, encourage drivers to accelerate gradually to enhance fuel efficiency
- Leveraging cruise control: Using cruise control on highways helps maintain constant speeds, preventing unnecessary fuel consumption and acceleration
Leverage fuel cards
Fuel cards can effectively help businesses manage fuel expenses while streamlining processes for company vehicles. The cards help minimize fuel costs by:
- Offering rebates and discounts on fuel purchases
- Enabling simple and accurate fuel expense tracking, letting you spot possible inefficiencies, monitor usage, and identify trends
- Calling for PIN authorization and offering personalized spending limits for every cardholder. This reduces the risk of unauthorized spending and fraud
Optimize vehicle maintenance
Proper vehicle maintenance improves fuel efficiency, resulting in lower fuel costs. So, implement a regular maintenance routine to keep company vehicles operating at peak efficiency.
2. Invest in a time-tracking system
If your business does manual time tracking, it’s losing a lot of money. This time-tracking technique is susceptible to buddy punching and time theft, leading to unnecessary spending. It’s estimated that 20% of each dollar an American company earns is lost to time theft, while 75% of businesses lose funds due to buddy punching. Investing in a time-tracking system can help your business save money. With manual punch clocks and timesheets, it’s impossible to verify who punched in.
However, a time-tracking solution that uses geofencing and requires photos to be submitted helps you know when your staff clocks in and out and assures you that they’re the ones doing it. Payroll leakage is another labor-related activity that results in unexpected loss of revenue.
This can happen when you’re required to pay overtime. However, investing in time-tracking software that notifies you when employees approach overtime can help ensure you don’t pay unauthorized overtime. This enables you to adjust scheduling as required.
3. Develop a business budget and stick to it
A business budget is critical to driving important decisions, such as cutting down on unnecessary expenses. It also helps keep your company out of debt or even find a means of reducing the debt it’s currently facing. Running a business without a budget can leave you deeper in debt and with more financial responsibilities that are hard to handle. Besides helping analyze your expenditure, a budget enables you to spot areas where your business is spending unnecessarily, saving money. An adequate business budget should include:
- One-time costs
- Fixed costs
- A cash flow statement
- Variable costs
Building an emergency fund or saving for unanticipated events can help keep your company from unnecessary borrowing, which can be costly.
4. Reduce staffing costs
Staffing costs, when not controlled, can get out of control. However, finding ways to lower staffing costs can help save money. You can cut these expenses by:
- Reducing employee turnover: High turnover rates result in a significant business expense. Start by finding the right fit for each role when hiring to avoid increased employee turnover. Finding ways to improve employee retention reduces the costs associated with new hires
- Embrace remote working: Encouraging your staff to work remotely can help cut in-office-related costs, such as space and machinery
- Invest in technology: Automating time-consuming tasks increases efficiency and reduces costs
- Consider part-time hires: Not every role in your company requires a full-time employee. As such, hiring part-time workers or outsourcing for such positions can help reduce staffing costs
5. Improve your marketing strategy
Cutting marketing expenses is a perfect solution for enhancing your bottom line. Improving your marketing strategy can help save money. you can achieve this by:
- Conducting a marketing audit: Auditing your marketing outcomes enables you to identify poor-performing campaigns and channels that are bringing in low-quality leads so you can stop wasting resources on them and focus more on marketing that works for you
- Enhance customer targeting: Leads that align with seller intent waste marketing funds. Re-examine your target audience’s profile to improve your marketing strategy and market segmentation
- Use marketing automation tools: These are more cost-effective than funding manual marketing campaigns
- Leverage referral programs: Incentivizing customers ready to recommend your company to others can help cut marketing costs. You can offer them gift cards, reward points, or discounts
6. Save on business insurance
While business insurance covers help safeguard your company from various liabilities and risks, they could also be an avenue for losing finances. Luckily, there are a few things you can do to keep business insurance expenses down, including:
- Knowing the insurance coverages you require: Since businesses are different, knowing the insurance you need keeps you from paying more for protection. With the correct insurance policy, you can cut costs in the long term
- Bundling multiple policies: Bundling several insurance policies can help your business save money. For instance, a business owner policy (BOP) eliminates the need for three standalone coverages as it includes business income coverage, commercial property insurance, and general liability insurance
- Raising deductibles: Raising deductibles helps reduce your total insurance expenses
- Encourage safe driving: Safe driving helps maintain clean driving records, earning you reduced insurance premiums
- Maintaining a good credit history: A high credit score shows the insurer that you’re responsible, helping reduce business insurance expenses
Lowering company costs can be challenging. However, adopting these tips can help your business cut expenses.