Have you ever wondered the best ways to cut costs and improve your profits? Your profitability could be impacted by out-of-control costs. In fact, take a look at your profit margin and it will likely reveal how well your pricing strategy is performing and if you’re doing a good job at controlling various cost centers.
If you need to cut costs immediately, consider these nine tips:
1. Ditch the physical location.
“Unless you’re in a field that needs a storefront, ditch the office and save money on rent by working digitally. You’ll also open yourself up to hiring talent that may not be located in your immediate area.”
2. Outsource relentlessly.
“Entrepreneurs often think that ‘doing it themselves’ is an effective way to cut costs, but you’ll often waste tons and tons of time trying to learn enough to do something effectively. Elance is a great tool for outsourcing, but there are tons of others out there – spending all your time trying to get better at selecting great talent is much more cost-effective, time-effective, and, ultimately, it is scaleable.”
3. Monitor your office space needs and payroll costs.
“Most businesses spend more on rent/leasing and payroll costs more than any other expense. The best way to cut these costs and increase profits is regularly monitoring your office space needs and consistently reevaluating the number of employees necessary to carry out the business’s operations. Streamlining these large expenses will not only help to reduce monthly overhead costs, but if done right will also improve operational efficiency, leading to a larger bottom line.”
4. Hire independent contractors.
“I’ve worked with the same designers and programmers for 10 years now, but they have the freedom to do other work, and I only pay them for the work they do. We have a great relationship and low overhead. I pass the savings on to clients, and clients love working with me and my team!”
5. Operate like a startup and think “lean.”
“If you’re making profits or have raised a large investment round, it’s easy to feel that you can throw a few thousand dollars at a marketing campaign just to give it a shot. Before you make any decision, really think it through. Work out the benefits of the campaign and consider where the money could be better spent. A lot of cost-cutting will simply come from being constructive with your capital and ensuring that if you’re spending a lot of money, you’re spending it in the right way.”
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