Small businesses are the backbone of North America. With more than 30 million small businesses in the United States and contributing to nearly 99% of Canada’s economy, the playing field for owners is heating up. According to the US Bureau of Labor Statistics, roughly one-third of small businesses fail because the owner runs out of money.
How do you change the narrative and find new ways to make operational processes more efficient and cost-effective?
Here are seven ways your business can cut costs in 2021:
1. Low-cost marketing strategies
For many businesses, marketing costs can quickly get out of hand, especially when there’s no plan. According to the SBA, most small businesses spend around 8% of their revenue on marketing. In highly competitive industries, that number is as high as 20%.
Developing a cost-efficient marketing plan between a 2-5% spend could help ensure marketing budgets meet the fullest potential. Think digital – it can often provide the biggest bang for your buck. There are many free online advertising methods, including social media sites, blogs, and videos.
To see how online retailers can better engage with customers, see BBB’s Business Impact Report on Online Retailers.
2. Reduce costs by considering outsourcing
Harvard Business Review explains how businesses can reduce costs up to 30% by outsourcing. For many business owners, outsourcing administrative tasks like servicing emails, document processing, customer satisfaction surveys can be time-consuming and expensive to do in-house.
BBB advises anyone considering outsourcing first to weigh the cost vs. the benefit. If hiring a service provider to fulfill a job, ensure that the business is trusted and vetted. Visit BBB.org to find trustworthy companies in your area. Often outsourcing with firms with a massive pool of employees can not only help you reduces costs but equip you with the latest technology and equipment.
3. Go green
Think long-game when transforming your company into an eco-friendly business. While there may be some upfront costs to consider, environmentally aware companies may save money in the long run.
Regardless of your business, here are some simple ways to lower costs by going green.
- Turn off lights, equipment, and machinery when not being used. According to the New Buildings Institute, most equipment is idle and unused for almost 90% of its lifetime.
- Reduce unnecessary waste and garbage to avoid added removal costs.
- Consider installing motion sensor lights or dimmers to minimize energy costs. Lighting accounts for almost 40% of your energy costs.
55% of consumers worldwide would pay a premium for products offered by eco-friendly and socially responsible companies. –Nielson
4. Reduce travel costs
As communities plan to reopen in 2021, make use of your online virtual power by reducing travel and conducting business online. Consider web conferences, virtual meetings, or webinars to meet with clients and new customers versus exhausting costs for face-to-face meetings.
Because of the pandemic, many businesses are allowing telecommuting for employees permanently. The need for large office space may be unnecessary and could ultimately eliminate added monthly expenses.
5. Create a budget
If you’re not already using a budget to control costs, consider starting in 2021. A budget can help you make smart and safe financial decisions and anticipate costs before it happens.
The Balance Small Business talks about three types of accounting that help you analyze, verify, and report results. Understanding your expenses and creating a working budget can help you avoid common financial management mistakes.
6. Shop local
Buying from local providers can offer you more flexibility and personalized service. Connectsteam recommends writing down a list of all major companies you work with and then comparison shop with local listings to see where you can save.
Additionally, buying local supports the community creates additional jobs, and can often provide you with better customer service. To find local, trusted, and vetted businesses – visit BBB.org and search for the BBB Accreditation seal.
7. Cut unnecessary perks
As tempting as it might sound, you may want to consider reducing or eliminating some staff perks or office parties. An alternative is to give employees additional time off to spend with family and friends versus spending more on gifts or small bonuses.
Business.com recommends business owners and company executives to dial back on any “exclusive” perks. It saves money and creates a sense of equal value between workers and managers.
2020 has proved to be a difficult year for businesses, as many struggle to stay open and survive. Budgeting and reducing simple costs can help your business get an edge in 2021 and be ready if it’s an unpredictable year.
Interested in getting your business BBB Accredited in 2021? Visit BBB.org/get-accredited.