In the last few years, business has been booming, especially in the United States. While Wall Street continues to see a significant degree of fluctuation, having seen record highs and record lows almost back to back, many businesses have seen more growth and increased profit margins than at any other times in their history. This has been true not only for the mega-corporations and big business but for the small franchises and ma’n’pop businesses around the country as well.
That being said, businesses continue to struggle monetarily. Production costs continue to rise; workers, especially Millennials and Gen-X’ers in the middle stages of life, are demanding more compensation and increased benefits; and there is an increasing gap between how much businesses are bringing in, and the rate that they’re increasing employees wages. Even in an economy that’s beginning to boom again, there are still plenty of challenges left to tackle. One problem that businesses all over struggle with, regardless of the state of the economy, is sustaining their business while making money.
This can be tricky. If you don’t cut costs to save money? You risk bankruptcy or shutting down. Cut too many? You’ve become a shell of your former self, and now your products and services are so subpar that no one is buying. It’s a difficult balance, but it’s one you’ll have to achieve if you want to not only survive but thrive. To help you strike that balance, consider the following three ways you can cut cost in your business while maintaining the high degree of quality that you’ll need to blow past your competitors.
1 Shop the Market for Cheaper Manufacturers
When it comes to the world of manufacturing, quality is king. It doesn’t matter if you’re producing a chainsaw or a kitchen sink – if your products are made from cheap, flimsy material, that break after six months of use, your customers are going to find someone else. But “more is better” is not a hard and fast rule, that you always have to abide by, when it comes to who manufactures your products.
You should already have your quality benchmarks in place, so you should know exactly how much you want to charge for your products, what kind of minimum shelf life you expect, and the most that you’re willing to pay. If you’re already outsourcing your manufacturing, look at who’s doing the work for you, and how much they’re charging. If you can find a manufacturer who can meet your quality benchmarks, at a cheaper rate, then switch.
2 Outsource Transportation and Distribution Needs
There are few headaches in the world as painful as keeping a fleet of motor vehicles on the road. Wear and tear, replacement costs, breakdowns – it all begins to pile up and can cost you some serious money, not to mention your sanity. Unless you’re 100% committed to taking on that headache for yourself, for whatever reason, you indeed need to consider outsourcing your vehicle needs.
Aside from saving you thousands, if not tens of thousands, of dollars each year on maintaining your own fleet, an outsourced pool of vehicles also doesn’t go towards your assets when tax time comes. Uncle Sam is fully committed to pinching every penny he can from your pool of resources and assets for your business. Outsourcing your fleet is just one less area they can take from, saving you money in the long run.
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3 Allow More Employees to Work From Home
Oftentimes, when businesses look at ways to cut costs, they look at cutting employees, and hard as it is to admit, it seems to make sense. Salaries, health and liability insurance, taxes, and other aspects quickly compile and take a heavy toll on your cash box. You can indeed save a lot by reducing your workforce. The problem is that this will cost you in ways that no amount of money saved can make up for.
When you cut employees, you’re cutting the experience, training, investment, continuity, and commitment that have allowed your company to get where it is. When it comes to the people who make your money for you, settling for fewer means settling for reduced quality, settling for worse products and services, and settling for losing your customers. What you can, and should, do instead, is to reduce the space you need to house all those employees.
Whether your own or rent your company’s building, it’s an expense. Property insurance, fire, flood, and natural disaster coverage, maintenance and cleaning fees, fees to bring your facility up to OSHA standards…it’s a big investment of time and money. By creating more work from home positions, you’ll save jobs, even if you still have to reduce your workforce, and can look at moving into a smaller facility, saving you a ton of money.