Reducing Business Costs: Successful Strategies

In my last article we talked about how to run the numbers with a cost benefit analysis. This time, we’ll look at how you can apply this thinking to analyse expenditure in individual areas of your business to ensure you’re running a lean, effective operation.

Staffing

  • Think carefully about your staffing model. Do you need full-time staff (and the financial investment required to maintain them) or would part-time or contracted staff give your business more flexibility?
  • Hire specialist contractors on an as-needs basis for short periods. By using experts in this way, you’ll get the best possible guidance during that time for a slight premium, versus having a full-time employee who may not have the specific skills or knowledge you need. If you can afford and need a full-time resource, great, but if not, don’t be afraid to bring in the experts as you need them.
  • If you’re really looking to cut back, build cleaning tasks into staff roles. Create a roster to rotate the jobs and a system to document and check the work has happened. You can’t risk having unclean areas of your business, but you can save on getting this work done. Don’t forget to consider low-cost, homemade cleaning products and disinfectants to keep your equipment clean and to prevent the spread of germs.

Selective staff hours

  • Consider a staggered approach to work hours to allow for increased staff presence and productivity in the workplace when your business needs it most. For example, in the fitness industry, 9am-11.30am and 1.30-3.30pm are usually far quieter than standard peak hours, so scheduling staff hours around shorter, focussed windows can often increase productivity and therefore business profitably.
  • Seasonal and trend factors also work best with this selective approach to hours—for example, summer months tend to be busier than winter.

Reduce, reuse, recycle

  • No matter what kind of business you’re in, but particularly if you run a 24/7 operation, ensure lights and air conditioning sensors are activated at off-peak times to keep electricity bills minimised. Put a note above all light switches to remind staff to turn them off when not in use.
  • Solar power can also be a viable option to help keep electricity running costs low. But don’t expect an immediate return on investment—your payback period could take up to five years.
  • Go paperless. Minimise printouts and digitise processes where possible.
  • Re-cycle—not only is it great for the environment but it will also help minimise costs.
  • And when thinking about efficient use of resources, can you consider subleasing a space in your premises to a complementary service provider? In the case of a gym it may be a win-win for you to rent space to a physiotherapist, a chiropractor or a dietician.

Purchasing policies

  • Purchase from wholesalers to buy in bulk and save money.

Maximising marketing budget

  • Although it may seem obvious to say ‘only spend money where it’s yielding the most results’, it can be difficult to actually measure the effectiveness and track the results. Try and track the impact where you can by analysing data and talking to your customers.
  • Pick the right marketing tool for the biggest return on investment. Will your customers respond to a flyer in the mailbox or are they more likely to pick up on a Facebook campaign? Or perhaps that money is better invested in Search Engine Optimisation (SEO)? Again, track the impact!
  • Share marketing costs with other like-minded businesses. Perhaps you can share the cost of an advertisement in a publication too—a half page each?

Capital expenses

  • Think about how major capital expenses can become tax deductions for your business. Currently the Australian Government provides a $20,000 ‘right off’ (for all businesses operating in less than $1 million per year gross revenue) for capital expenses. Capital expenses include equipment, security, some software and technology-related services. So reducing tax paid can also reduce costs, and sometimes very big costs!

Talk to your local PaySmart Business Development Manager for more great ideas or read more on the PaySmart website.

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