The amount of money a small business owner has at their disposal is almost always limited, and they understand the importance of every penny. Because of this, they’re trying to cut costs and increase revenue by any means necessary. Through trial and error, smart small business owners have learned ways to cut costs that don’t affect revenue too much. Today, we’re going to discuss these ways to improve your profits.
Embrace Tech Innovations
Whether cloud computing for remote collaboration, artificial intelligence (AI) for automation and predictive analysis, blockchain for better transparency, or outsourcing the financial management of your back office, every technology has impacted our daily operations.
Here are some ways to embrace technologies to cut down costs.
Small businesses can automate several mundane tasks with the help of AI. AI is a revolutionary technology that can use historical data to create patterns and then follow them to automate tasks. According to Forbes, a company can save up to $4 million annually through automation. This is backed by another survey of global employees where over 50% claim that they can easily save up to 2 hours a day or around 240 hours annually by using automation.
Another area where automation can save time and money is errors and mismanagement. Data shows that businesses lose around a trillion dollars yearly because of mismanaged tasks, and automation can solve that. Workflow automation can reduce misalignment to ensure priority tasks are handled first and by the right people. Also, automated tasks are usually completed with 100% accuracy.
By outsourcing applications and IT infrastructure to the cloud, businesses can reduce or eliminate the need for in-house hardware and software. In addition, by using cloud services, companies can take advantage of economies of scale, paying only for the capacity they need on an as-needed basis. This can result in up to 50% savings compared to traditional IT spending. In fact, cost optimization is the top reason influencing around 47% of cloud migration.
Cloud computing can also help businesses reduce their energy consumption and carbon footprint. By moving applications and data to the cloud, companies can reduce the number of servers and data centers they need, reducing energy use. Cloud providers are also increasingly using renewable energy sources to power their data centers, making the cloud more environmentally friendly.
Big Data Analytics
Data is increasingly growing today, so why not use it to save you some money? The global big data industry is expected to reach a whopping $103 billion in revenue by 2027, and a major contributor to this growth is analytics.
By analyzing large data sets, businesses can identify patterns and trends that would otherwise be difficult to detect. This information can help companies to make better decisions about where to allocate their resources, resulting in cost savings. Additionally, big data can improve marketing efforts and optimize website traffic. Ultimately, using big data can help businesses become more efficient and profitable.
Cut Down on Supplies
As businesses keep looking for more and more ways to cut costs, it can be easy to overlook something as trivial as office supplies. But this is a massive expense, and many businesses will order too much of everything.
The paper comprises a large chunk of the supplies businesses use. According to data, the world produces around 300 million tons of paper, most of which goes to waste. The EPA says that paper and paperboard materials are the largest solid waste component. The best way to cut down on paper supply is by going paperless.
By sending softcopies, you can eliminate the need for papers in invoices, onboarding documents, or contracts. If you are worried about legal binding through these procedures, e-Signatures can help you. An e-Signature can legally bind the signee while assisting you to cut down on the need for paper. It is created through encryption by generating a unique private hash. This can help verify who signed the document and at what time to legally bind the person.
When you cut down the use of papers, use other supplies like inker, staplers, pens, etc., automatically reduces. While this might sound like very little cost, it can save you a fortune in the long run.
Analyze Staffing Costs
Employee hours can be tracked to see if any employees are working more than they should be and whether or not they are making an appropriate salary for their work hours. If employees are overworked or underpaid, businesses can adjust their staffing costs. Additionally, companies can look at employee benefits to see if they are too costly.
By analyzing staff costs, businesses can understand the workloads and salaries of employees. This can help dedicated and loyal employees from getting burnout, making them more productive. According to the estimates from WHO, the low productivity caused by burnout and stress can cause $1 trillion annually to the global economy.
Monitoring employee performance is also an essential aspect of business management. The key to effective employee performance analysis is to focus on relevant and meaningful metrics for your business. For example, if you have a customer service department with many call center agents, it would make sense to look at the average call time per agent or average calls answered per hour compared to the industry standard.
Leverage Digital Over Traditional Marketing
Digital marketing is a cost-effective way to reach potential customers and promote your product or service. In fact, it can be up to 60% cheaper than traditional marketing methods. Additionally, digital marketing allows you to track and measure results to see what is working and what isn’t. This means you can save money by changing your campaign without spending much on expensive market research.
Digital marketing is also highly versatile, so you can tailor your campaigns to specific demographics, interests, and locations. This means that you only pay for relevant advertising to your target audience, which saves you money.