Saving money is something we typically think of as a consumer activity, something that we do at home to free up money for a new car or nice steak dinner. When it comes to a business, we think about savings more in the context of eliminating costs instead of finding ways to lower them.
The reality is that businesses can operate with the same thrifty attitude that their employees and managers may have. There are essentials that you must spend money on, but if you understand that it pays to economize on them at home, why wouldn’t you do the same at work?
Businesses spend money on many of the same categories that families do, and they can use many of the same techniques to lower those costs and end up with more money available. The big difference is that their savings may fund an expansion or a new employee instead of a steak dinner.
A big area of expense for almost any business is in supplies. The daily consumption of these items can add up very quickly. For example, a printing company that can save money on its inks, vinyls, and promotional items by going through Coastal Business Supplies has a distinct advantage over competitors that put less effort into finding more affordable vendors.
Utilities can also add up quickly. Businesses with customer traffic always struggle with this, because the doors are constantly opening and closing, leading to higher costs for maintaining appropriate temperatures in the building. Installing automatic doors can be a great choice for busy locations because customers don’t hold them open and allow climate-controlled air to escape.
Even a mail-order or online company can save on utilities. There are lots of ways to reduce energy consumption with things like light fixtures and machinery. It is also very beneficial to have a good routine maintenance program so that you can spend a few dollars to avoid a more costly repair later on.
Transportation is another major expenditure for businesses. If your employees have to go anywhere in a personal or company vehicle, a good system for planning those trips can save money. Organization is a big part of this; each department should coordinate with the rest of the business to be certain that one group doesn’t go out for just its own purposes but instead makes a single trip for several functional units.
Once a company fleet is involved, the potential for savings is even higher. Good care of the vehicles is a start, but organizing deliveries in the most efficient way will drastically reduce fuel consumption as well as the time spent on the road, lowering costs in both fuel and wages.
A final area is contracting. Many businesses get in the mindset that they want to do everything in-house, but that’s not always the most efficient choice. A small company with a small payroll may be better served to hire a specialty firm to handle paychecks (or direct deposits). The building may be too small to justify hiring a custodian, even part-time, so a contractor might be used for cleaning and repairs. These options are available on everything from lawn care to social media management, and they are worth exploring in a cost analysis.
Anytime a company can save money on its costs, the bottom line will look better. Shareholders, owners, and managers like to see costs going down because the market is often too competitive to increase prices or try other techniques for bringing in more revenue.
Remember that the same level of revenue can lead to either a profit or a loss, with the difference rooted in costs. A company that takes a thrifty attitude toward everything it uses can eliminate a lot of red ink and create a sustainable, profitable model that will weather tough times and outrun the competition in good times.