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3 Key Ways to Cut Costs in Your Business

Unless your business is very young, it’s probable that you have already analysed the ways you can improve your efficiency. So what do you do when it seems like you have to make more cuts, when your net profit margin keeps declining even though you have strong sales?

The answer is you need to reduce your running costs. What does that involve? Many business owners panic and starting making staff cuts. But getting rid of staff – especially those that have experience, knowledge and commitment to your business built up over several years – is like throwing the baby out with the bathwater. You are not just getting rid of a person, you are ditching a valuable resource.

Fortunately, there are ways to cut costs without saying adios to your employees. Here’s how to make cuts that won’t leave you worse off than you were before.

1. Staff cuts versus part-time workers

Instead of sacking staff, ask around and find out which staff members are actually looking for reduced hours. It might surprise you to learn that someone has been wanting to cut their hours for some time but is afraid to ask you because they think they might be asked to leave! If you think about it, there are hundreds of reasons why someone on your staff might be looking to reduce their hours. However, if no one puts their hand up, it might be time to have your most junior staff member go part-time and ask the others to shoulder more responsibility.

2. Put your day-to-day activities in the cloud

If you rent a PABX system or a fax machine from a telco, you can ask them to come and take their equipment back. Savings on equipment can be made straight away by putting your communication systems in the cloud. After all, you already do it with email and Skype, why not make it a clean sweep? You can send and receive faxes online with a monthly subscription to a virtual fax number that works on your PC – attach documents to an email, address it to the recipient’s fax number and hit send. There’s no fax line rental because you use the internet to send faxes. An added bonus with a cloud-based system is that you can file share using your email client, but with a much higher (1GB) attachment limit than regular email.

3. Reduce your rent – go smaller or change location 

A business with five employees working in an office in the Sydney CBD that could accommodate twenty needs to do one of two things – move to a smaller and cheaper office in the same zone or move to a cheaper area and keep the big office. It may be that you have located your office for status or to be near a particular hub of activity. But if you don’t reduce your overheads, you may not need an office at all. Take a long and objective look at your office accommodation, and if it’s a drain on your running costs, move.

You don’t have to fire staff, stop using faxes or move your business HQ into your mum’s garage. With a bit of thought, you can make practical cuts to running costs that will leave your business leaner and more able to weather the hard times.

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