4 Ways to Boost Your Business by Cutting Costs
The best ROI is achieved when you stop wasting money.
Peter Drucker once said that businesses had two main functions -- marketing and innovation -- that produce results. "All the rest are costs."
If you agree, that means that the average business has a lot of fat to trim. Obviously you can go overboard trying to cut costs too. My philosophy has been to look at some of the general areas where you can add some efficiency but not at the expense of impairing your truly most valuable resources -- your focus.
The following cost-cutting measures will do that. Rather than penny-pinching, think of these as adding something to your company, whether it’s time, creativity or a closer connection to your consumers:
1. Uncover inefficiencies in your process.
This is where I begin. In fact, it was through analyzing the inefficiencies of legal communication and knowledge sharing that first led me to create Foxwordy, the digital collaboration platform for lawyers. I noticed that attorneys in our clients’ legal departments were drafting new documents from scratch when they could pool their knowledge and save time by using language that a trusted colleague had employed in a similar doc. Business is all about process. When you create a process where you had none, or enhance an existing process, you will drive cost efficiency.
2. Refine your process, then automate.
If existing processes were lacking, then it is time to create process. If you had processes, but they were not driving efficiency, then it’s time to redefine your process. Either way, a key second step is refining processes that are needed in your business. Only then can you go to automation, since automating without a process is only going result in chaos -- and won't save time or money. Similarly, automating a poor process in not going to give you the results you are looking for in terms of cost-savings.
Thanks to the cloud, there are very accessible means of automating what had recently been manual processes. For instance, you can automate bookkeeping functions with FreshBooks and use chatbots to interface with clients -- for very basic information. For instance, if you’re a retailer, a chatbot on your site can explain your return policy or address other frequently asked questions. Automating such processes allows you to spend more time focusing on clients and customers. Technology alone isn’t a panacea for all business functions, but if you find something you’re doing manually that can be automated, take a look and consider how much time process definition and automation would save you.
3. Rethink your outreach.
Marketing and outreach are usually big challenges for an organization, yet these endeavors are extremely important. In my experience, there are two main components to successful marketing -- knowing your customers and using the most effective media to spread your message. For the first part, I recommend polling. There are various online survey services that let you get an instant read on what your customers are thinking. You may think business is humming along, but a survey could reveal that while consumers like your product, a few tweaks would make it even better.
For the second part -- marketing messaging -- once you have a firm idea of your marketing messaging, Facebook is a great vehicle for outreach. The ability to granularly target customers and to create Lookalike audiences (from around 1,000 consumers) can help grow your business.
Scrutinize your spend history.
There are tools that can help you get a handle on your spend history and review it to find opportunities where you can save. For example, for common business expenses, like travel, you might be able to take advantage of rewards or loyalty programs. There may be areas where you are using multiple vendors for a similar function and can consolidate. If you have a long-standing relationship with a vendor, you might be able to negotiate better pricing. These can be quick wins for cost savings in your business.
The most important elements to keep in mind are those resources that make your company special. Your company may be built upon one person’s (most likely your) reputation and expertise. Guard at all costs against cheapening that reputation with inappropriate messaging in advertising or social media. If your company’s special sauce is intellectual property, then don’t skimp on protecting that as well. But everything else -- ranging from physical property to salary and benefits -- are costs and should be considered negotiable.
Entrepreneur Editors' Picks
These Co-Founders Are Using 'Quiet Confidence' to Flip the Script on Cutthroat Startup Culture and Make Their Mark on a $46 Billion Industry
My 7-Year-Old Daughter Started Selling Eggs. Here's What She Taught Me About Running a Startup.
Why You Need to Become an Inclusive Leader (and How to Do It)
Career Transitions You Can Make in Your 40s and 50s
Billionaire Naveen Jain Is an Expert at Disrupting Fields He Has No Experience In. His Secret Sauce for Building Multi-Million Dollar Companies? 'You Have to Come as Naive.'
4 Principles to Develop Next-Level Leadership at Your Company
This Filipino American Founder Is Disrupting the Beverage Aisle by Introducing New Flavors to the Crowded Bubbly Water Market