When businesses face cost-cutting measures, many look to reduce costs by cutting back on labor or materials. However, these strategies may not be the most effective way to streamline your operations while keeping quality high.
These business owners often forget about other potential cost-cutting options, such as reducing overhead expenses and unessential assets like equipment, amenities, or nonessential services. These strategies will help you decrease costs that go beyond simply reducing your labor and supplies—so you can continue producing high-quality products without breaking the bank.
Streamline your operations
Operational costs can be reduced by taking a hard look at your processes and identifying inefficiencies. If you can make small changes to your production or distribution that make your processes more streamlined, you can significantly reduce your costs without sacrificing quality. For example, if you’re using a manual inspection process that could be automated, you’re adding unneeded steps and increasing the likelihood of human error. As another example, if you’re using an underpowered or non-optimal piece of equipment, it may be contributing to a slower process or have a higher chance of breaking down.
Reduce your equipment costs
Equipment is one of the biggest expenses for most businesses, so it makes sense to keep an eye on it. Inventory that you’re not using is costing you money. Equipment that is old, broken, or not capable of meeting your production demands is more likely to experience issues and cause downtime, which can cost your business money.
For example, if you’re using a machine that is more than ten years old, it may not be energy efficient. Replacing it with a modern, energy-efficient machine could save you thousands of dollars each year in energy costs. Another example is if you’re using an underpowered machine that is not capable of meeting your production demands. In this case, you may be spending more on labor or hiring more people to compensate for the slower production.
Find ways to save
Though we’ve discussed things you can cut or ways to reduce costs, there are also plenty of parts of the business that cannot be changed or cut. In these cases, you need to turn to ways to save money on the processes you are already doing. Look to buy essentials in bulk in order to save money. Whether this is essential parts of even printer ink, there are plenty of deals online - for the latter, consider deals from printerinks.com.
Reduce your amenities and luxuries
Some businesses include luxuries or amenities in their production or delivery process that aren’t necessary. For example, many businesses include delivery with their products and services, but others do not. You may also offer amenities like free or expedited shipping or a free gift with purchase. If these items are not bringing in significant revenue, consider removing them. While these extras may make your customers happy, they can also add extra costs to your business.
Eliminate unessential services
Some businesses offer unessential services that add extra costs to their production process. For example, if you offer nursing services that don’t require a license, you’ll likely need to hire extra staff to cover your bases. While these services may be helpful to your customers, they also add to your overhead. If you’re not legally obligated to offer these services, consider eliminating them for a cost-cutting measure.
Rotate your workforce
Overtime is an indication that your business is at capacity and that you’re not managing your time effectively. If one employee is working overtime, consider hiring additional staff members to help share the load or redistributing work to other employees. The latter option may be cheaper and easier than hiring new people.
In addition, some industries have industry-specific overtime rules. If you have employees working more than 40 hours per week or 9 hours per day, they may be entitled to overtime pay. This is especially common in healthcare and manufacturing. If you are violating overtime laws, you’re essentially paying your employees twice for the same work. This is a costly mistake.
