While cost efficiency always makes smart business sense, it’s become a matter of survival for many small business owners.
The COVID-19 pandemic has accelerated the need for belt-tightening and thinking creatively about where you invest every dollar. You’re likely dealing with extra expenses around new health and safety protocols, but facing lower than expected earnings.
In this tumultuous climate, most businesses aren’t able to control sales or profit margins. This means that saving money is one of the only things you can control. Reducing expenses will ultimately protect the long term health of your business.
Creating a smart savings strategy will help you free-up dollars to invest in other areas that are core to your business -- like marketing and sales, the right talent, and new technologies that you’ll need today and for the future.
Prioritize changes that will add immediate value.
Some of the energy savings tips not only unlock instant savings, but also come with cash rebates.
Address the low-hanging fruit first.
Look for uncomplicated improvements with low dependencies.
Identify creative savings opportunities.
If you can save money and create a healthier environment, the dividends can pay off.
Many companies have had to rethink their physical locations. Getting creative in this area can unlock surprising savings.
Businesses can save over $10,000 each year for every employee they let work from home.
You can reduce your electricity bill by about 60% when you switch to LED. Some energy companies will even cover the cost of the lights.
Many small retailers are closing up shop. Travel is down. Hotel rooms are empty. Restaurants are running at half-capacity, if they’re able to offer service at all. Consumers are holding back on major spending and radically changing their purchasing habits.
Businesses are looking for ways to fund new initiatives and change-up their offerings to meet today’s needs. Some industries are prospering, but even in good times saving for the future is critical.
Disaster relief programs have helped many SMBs and big companies weather the financial storm. Even if you’ve gotten that much-needed cash infusion, you need to make every dollar count.
Smart businesses are mapping out cost-savings plans that will carry them through the challenging road ahead, as uncertain as it may be.
In fact, business spending is expected to decrease by 10-20% in 20201.
But where should those savings come from? And how do you begin?
Start by identifying a savings champion who can rally your team together. If you’re a small business owner, this is probably you. For a bigger company, it may be the CEO, CFO or Controller.
Then bring everyone into the loop. Your team is more likely to commit to a cost-saving effort if they are part of the process. Explain to your team leaders that deliberate and growth-oriented spending needs to become part of your company’s mission and values. If managers and employees understand that you’re not just “slashing and burning” expenses, but are protecting everyone’s jobs, they will respect and engage in the process.
According to experts, bringing your team (including outside advisors) into the cost-saving process will ensure buy-in and faster action.
Casey Anderson, Chron
Every business, regardless of size, has expenses that haven’t been examined for months or even years. The key to meaningful cost savings is understanding which of those costs are business-critical and which will go unnoticed by customers and employees.
Many companies have had to furlough or let go of team members. As you think about your team, make sure you have talent on board who can shape your future. Naysayers or those who are wedded to “the way we’ve always done it” will not necessarily help you change how you’re spending your valuable dollars. Great ideas can come from anywhere. Listen to everyone -- at every level.
for examining expenses that’s enjoyable and inclusive. If you build a spirit of teamwork and creativity, saving money becomes a challenge. Reward people for great ideas and celebrate successes. Over time, employees will encourage each other to take cost-savings actions. For example, successful businesses train their employees on the significant impact of energy savings.
Set specific cost-reduction goals and report on them regularly. Reporting systems should be simple and focus on the most significant opportunity areas. Just as you share sales results, broadcast meaningful cost savings successes.
Engage third-party partners and suppliers who can help you objectively analyze expenses and provide case studies and perspectives from their other clients. The right vendors and service providers don’t just cost you money; they can help you save it.
There are six main areas of your business where you can look for savings. Some of these may already be on your list, but there are likely a couple that you haven’t thought of yet.
When you engage people outside your organization, you only pay for tasks or time when you need them. Plus, you can gain broad and deep expertise from seasoned professionals who choose to work for themselves rather than in-house. You save on benefits, space, and even on time. Freelancers and contractors are often willing to work hours that employees may not.
Track your peak periods and make sure your staffing matches up to them. This isn’t a “set it and forget it” exercise. Chances are that your traffic flow has changed drastically this year, and will continue to do so. You may be operating under restricted hours. And people’s buying habits are certainly different. Be sure that you’re regularly evaluating your peak hours so you can take an agile approach to scheduling.
Track your peak periods and make sure your staffing matches up to them. This isn’t a “set it and forget it” exercise. Chances are that your traffic flow has changed drastically this year, and will continue to do so.
You may be operating under restricted hours. And people’s buying habits are certainly different. Be sure that you’re regularly evaluating your peak hours so you can take an agile approach to scheduling.
Companies are going paperless, especially in an era where we’re limiting human contact. Many consumers prefer digital communications. Contracts, instruction guides, invoices and other paper-based communications can convert to electronic media or print-on-demand technology.
Paperless communication is:
"In a year, the average employee prints 8,874 pages, and 17% of them will go unread.”
That applies to internal printing as well. The average employee prints 10,000 pages each year. It averages out to a yearly cost of about $725 per employee. And 17% of those pages are never even read.
How much is printing costing you?
People who know and like your business are the best source of new customers.
Focus on keeping your existing customers happy. The cost of replacing them is significantly higher than the cost of retaining them. And they’re often the biggest advocates of your business.
Consider creating a loyalty program to reward customers for their repeat business.
Offer your customers incentives for referring their friends and family members. We actually offer a $500 bonus for customers or the public who refer businesses to FES.
If you’re not using an e-mail marketing tool that lets you send automated emails to customers based on individual attributes, you may want to consider it. This will save you time and effort in the long run because you can market with precision. This graphic overview of what an SMB should have in its “tech stack” is useful to all types of businesses.
Purchasing your equipment outright isn’t always the right way to go. You may want to consider leasing more expensive technology or equipment.
Business News Daily offers a great guide for business owners to navigate the ins and outs of leasing equipment.
One company’s excess inventory can be another company’s treasure. From refurbished computers or copy machines to used appliances or restaurant equipment, buying used can save you thousands of dollars. This can be especially helpful if you’re transitioning to a remote work force and need to provide your team members with laptops or other technology to work from home.
Be sure that the equipment you’re buying is easy to maintain and upgrade. The Small Business Administration offers some tips. You can also search for advice related specifically to your industry or type of equipment you need.
Inefficiencies abound in all types of businesses. As you work with your team on cost-saving ideas, find out where they are spending the most time. Chances are, there’s a tool available today to automate parts of those highly manual processes.
People sometimes get concerned about the idea of automation. This is where it’s important to approach these changes from the perspective of making your team member’s lives easier and freeing up their time to focus on more important areas that can’t be automated.
Buyers can often negotiate discounts for early payment or paying in advance annually for necessary services. Talk to every vendor you currently use about what savings options they offer.
Make sure your business credit cards have the best rates and perks. How you’re managing your money can be as important as how you’re spending it. Bank fees are another line item that can add up. Do a thorough audit of what you paid last year in fees and interest and commit to reducing that number.
As working from home (WFH) becomes more mainstream, some companies are rethinking their building spaces. Many businesses are transitioning to virtual or downsizing locations.
If you have flexibility in terms of where your business is located, look to lower-rent areas when your lease is up. Opportunity zones offer significant incentives for companies willing to locate in up-and-coming neighborhoods.
Before you move on, try to negotiate your current lease terms. Even property management companies are struggling. Many landlords will provide some financial assistance in order to keep tenants in place.
Depending on the nature of your business, some team members might not necessarily need to be onsite all the time. Allowing employees to work from home can save energy costs, result in greater employee satisfaction and allow employees to be more productive.
Bright Idea #20
Keeping your place of business clean is no longer an option -- it’s a legal requirement and public safety necessity. This isn’t necessarily an area to bargain-shop, but know your facts before investing in new cleaning products, systems and touchless equipment. Co-op buying and contract negotiation can save you money on necessary expenditures.
Bright Idea #21
If your business is facing temporary closures, it can be a great time to complete repairs or upgrades that can help you save money in the future. Consider making updates that you’ve never had the ability to get to with a full staff on your property, like making repairs on inefficient machinery.
Obviously, we’re talking about a little more than just energy here, but water is a major expense too. And a precious resource. Leaks and drafts cost money.
A little stripping, caulking, and plumbing maintenance can go a long way. Check all your sinks, toilets, pipes and irrigation systems to see if you’re losing water anywhere.
Search your building to see if there are any small drafts of air coming in. Be sure to properly seal drafty areas once found. Drafts, no matter how small, can result in increased heating and cooling costs throughout the year.
Investing in minor upkeep around your premises will help you reduce utility costs. Take a look at where you can limit waste.
A smart thermostat can do wonders to help regulate your business’s energy use each month. They let you program temperature settings for different spaces. Some systems can automatically adjust the temperature of a space based on whether or not people are in it. Many include diagnostic features to advise you when your equipment needs to be serviced.
Motion sensors activate lights on different parts of your property based on motion in the area. The same sensors turn the lights off when no one is in the space. Installing motion sensors will not only reduce your electricity expenses, but your light bulbs will last longer too.
One of the biggest ways to reduce your electricity costs is to switch to energy-efficient lighting. Many small businesses have outdated lighting systems that consume too much energy and require high maintenance. By switching to LED lighting, you can reduce your monthly electricity bill by around 60%. Some lighting-as-a-service (LaaS) providers even offer zero upfront capital upgrades and free maintenance so you can start saving instantly.
While some businesses are counting pennies, the savviest ones are making investment decisions that will yield long term savings and value. Switching to LED lighting will not only lower your electricity costs. You will also:
in energy savings
energy efficient lights
of CO2 emissions/yr
Future Energy Solutions is on a mission to make it easy for businesses to make smart energy choices.
We design, deliver, install, and maintain LED lighting upgrades with zero capital cost up-front, making it easier and more cost effective than ever for businesses to switch to LED. We work closely with our customers to engineer custom lighting solutions perfectly tailored to individual business needs that deliver unrivaled savings.
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