How to Deal with Rising Business Expenses
16 Jun, 2016 / Comments: Comments Off on How to Deal with Rising Business Expenses / By William Mahnic
The rising cost of health care, gas prices, and other such expenses has given businesses in the US a major challenge to stay afloat. Increased costs can have a major impact on your bottom line. If you feel the pressure of rising expenses, then it likely is time to review your business strategy and implement a few needed changes. Be assured that you are not alone in this battle, as there is not a single business that isn’t impacted by the rising cost of fuel, real estate, rent, health insurance, equipment, marketing and labor (and let’s not forget about taxes.) It is difficult to manage your company finances when dealing with rising business costs. However, here are several ways to cut expenses and boost sales to make it easier.
Location is Key
Have you been using your location to its maximum advantage? If not, then it’s time to think about doing so to cut your business expenses. For example, consider switching to local suppliers who can offer you discounted rates through lower delivery costs. Additionally, you can consolidate the scheduling of your business engagements in one area to a single day so that you don’t have to waste gas going to the same place multiple times.
Use Technology to Your Advantage
Conduct all of your business meetings using Skype. You may even want to consider getting rid of your office entirely and only communicate with your staff using Skype, telephone, and e-mail. If needed, you can implement weekly face-to-face meetings to ensure everything is running smoothly.
Don’t Be Quick to Cut Essentials
Two areas that it is important to go slow in cutting costs in is letting employees go and reducing your marketing budget, as these two are essential to run a successful business. If you’ve already cut the fat in every other area and still need to have stronger profits, then instead of cutting into your marketing budget or letting employees go, consider changing your pricing structure to keep ahead of increasing costs. Doing so will result in better customer loyalty and PR, especially by staying current and not hiking your prices up all at once.
In this global economy it would be a shame not to take advantage of selling your products abroad, as there are huge growth opportunities to doing so. Consider pushing your products to the European market or English-speaking Countries such as in East Asia. However, if you go with this strategy then make sure that you do your due research before to ensure that your products are properly catered to international buyers.
Manage Your Sweet Spot
How do you properly manage the sweet spot between costs and price-optimization? Avoid the most common error made by businesses—basing your price on your expenses and not your customer’s value perceptions. Additionally, when increasing your expenses, it’s critical that you communicate these increases to your customers.
Know the Value of Your Marketing
As previously stated, marketing is key. It’s critical that you continue to maintain your marketing even when costs are increasing. By investing in your brand, your customers will respond favorably and thus your profits will increase. Be aware that quality branding will increase your customer’s value perception. However, it’s best to avoid coupon sites, as you won’t make any profits from using those.
You don’t just need to think about your business when you need to cut costs, but your home life as well. To save money, ensure that you are applying all of the typical home strategies to save money. For example, ensure that you turn off all the light in the rooms that aren’t being used. Additionally, re-use or re-purpose items or repair older items instead of buying new ones.
Foster Business Relationships
Foster relationships with other small business owners to purchase things in bulk and reduce your costs. It is also recommended that you sign up for a business owners’ organization so that you can network and find business owners with companies similar to yours.