The main challenge of running a small business is striking the perfect balance between expenses and revenue. When the latter consistently out-strips the former, higher profitability becomes a reality. But it isn’t a walk in the park. Perhaps the reasons below can drive you towards making it happen.
- When you can survive and thrive with little, you’re well-positioned to meet the challenges of a downturn where belt-tightening has to happen.
- Investors love businesses with lower costs and higher returns, which makes your business well-positioned to secure investors or buyers.
So, how can you keep the lid on expenses?
1. Automate
Be prepared to be surprised by the cost savings automation can bring. But aside from lower wage costs, automation increases productivity. Minutes or hours can be shaved off activities core to the business, for example, CRM systems or other marketing automation systems.
2. Outsource
Outsourcing cuts away a lot of ‘fats’ in the business. Start by identifying functions or activities that can be done without the need for a permanent employee. Bookkeeping is the best example. It needs to be done diligently but certainly not daily if the business is small. Hence, for cost-efficiency reasons, it is best outsourced. Another example is social media marketing. For a small business, it isn’t an everyday activity. In addition, you may not have the expertise either. Outsourcing keeps fixed expenses low while at the same time enabling you to have the right expertise.
3. Interns
Running internship programs or providing an avenue for apprentices is increasingly the norm of educational institutions. With a growing emphasis on producing graduates ready-for-the-workforce, internship programs act as a nice bridge. Today’s interns are better prepared and eager to prove their worth. They are a good resource to turn to as associated costs are low.
4. Regular reviews of business operations
In the busy-ness of growing the business, you may have splurged on a thing or two. A state-of-the-art server, long business lunches or unchecked overseas trips. They add up. Review your business operations periodically to cut away the ‘fats’.
Keen to learn how you can improve your profitability? Speak to us today.
Image by nattanan23 via Pixabay