Any successful business owner out there is always looking to cut costs without cutting corners. Although the concept of reducing costs, boosting profits, increasing productivity and maintaining quality simultaneously sounds too good to be true, it isn’t entirely impossible either.
Whether a business is capable of doing that or not depends entirely on how far along they are on that road already. Which is to say that, if by the time you are done reading this article, you have found that your business is already in line with everything discussed and more, then your business is most likely near its optimum efficiency level already, at least for the time being. However, if you reach the conclusion that there are certain elements of this read that you can still incorporate in your business, then you certainly can chomp down on expenses and boost profits, given that there is still room for improvement.
Opt for Short Packages
Find and stick with services that offer monthly packages, bi-monthly packages, or even quarterly plans, but nothing longer than that. It’s a common business policy for IT service providers from all genres to:
- Offer a contract for long term service at a lowered monthly charge
- Give clients/customers the option to get a lowered monthly rate by paying for a whole year or more at once and in advance
If you are looking to reduce expenses, neither is going to be a good idea, because:
- You may find a better, more cost-efficient option down the line
- You may not need their services anymore in the future, and before the tenure is over
- They could and will most likely, try to upscale your plan with add-on charges anyway
- When you spend on digital services on a strictly as-needed basis, detecting unnecessary expenses will be much easier
- If you find a long-term IT service to be one of the unnecessary expenses, you will lose the power to stop it on account of the contract
- Once you sign up for an expensive long-term plan, some SaaS providers may not let you downscale
Look for Cost-Effective Digital Services
When you are only looking at the most common or popular options, there’s a high chance that you might be missing out on more cost-effective services. For example, Mailchimp is the most popular email service provider out there for sure, but did you know that there are Mailchimp alternatives that offer a much more varied set of features, at a price that’s as much as four times cheaper?
Similarly, always look for what you are getting, rather than just looking at who’s the most popular digital service provider for that service. Consult your own tech guy if you are not familiar with the more intricate technical bits yourself, but always ensure that an IT service is providing you with the best bang for your buck.
Understand the Complex Correlation between Productivity and Service Regulation
An important core mechanic in lean manufacturing and management is the idea of reducing wastage. This is why we had put forward the idea of reducing financial resource wastage by eliminating or limiting unnecessary digital services earlier. There is, however, an important correlation between service regulation and productivity, which must be maintained on the basis of two primary rules:
- Each expense curbed or eliminated must not impact the productivity of a business process or the business as a whole
- Productivity is not the ability to produce more, but the ability to produce exactly what’s needed and no more
Once you get that balance right, implement it long enough to make it the standard procedure for that part of your business. After a while though, it might be time to review the process and see if there’s enough justification to establish a new standardization model.
Compare Expenses Between Outsourcing and Hiring
The decision to put someone on a permanent payroll should be considered and reconsidered before going forward with it. This is not to say that there are no benefits to hiring your own employees, but it has to justify the overall cost-effective model that we are trying to establish here. In most cases though, it has been found that SMEs near the lower end of the spectrum benefit most when there’s a small, core team, assisted by an expanded, and as-needed outsourced team.
The tips discussed here are universal in nature for the most part, but it’s going to be particularly helpful for SMEs with high potentials for reducing expenses sustainably. As many of the ideas were taken from the core philosophies practiced by the likes of global enterprises such as Toyota and Microsoft, rest assured that they should be able to do wonders for cutting down expenses from your own business as well.