A business must be able to control its cash flow in response to changes both within the market and within the business itself. Most of this flexibility is going to come from how able you are to control your spending. Furthermore, if you’re able to effectively control your spending without affecting your productivity or profits, there is a good chance that you were overspending, to begin with. Here, we’re going to look at some common sources of overspending in business and a few major ways you can cut the costs associated with them.
It’s the cost that you want to cut last, or not at all if possible. No-one likes having to let go of good workers, after all. However, labour is the place where it’s easiest to overspend entirely because they are so expensive. Aside from the costs to keep them employed, there are also associated recruitment and HR costs, as well. For that reason, when you have a skills gap in your business, it’s occasionally worth taking a look at whether you should outsource instead of hiring, or if you can find a temporary freelancer to come into the business, instead. Only hire when you’re certain you can afford it and justify having a whole position to fulfil the duties you’re hiring for.
Another area that’s all too easy to overspend in is the equipment that you use to communicate both internally and externally. Nowadays, with team communication tools, you can easily tie all internal IMs, emails, and resource sharing processes within one centralised platform. However, these can be further combined with your phone and headset communication tools that are used for external communications, as well. These unified communications can stop you from having to pay multiple service providers. When you pay multiple providers, you’re paying the fees for each contract individually, not just for access to the equipment and services that they provide. For that reason, it can be more cost-effective to bring all comms in under one provider and only pay one fee.
Equipment and machinery
There are some physical pieces of equipment and machinery that are going to be a must in your line of business. For instance, if you run a construction business, then it only makes sense that you would need a digger since most jobs are going to involve using one to dig up room for building foundations. So, you will want to buy the digger. However, it might not be as wise to buy a crane even if you need to occasionally use it on jobs. If you don’t use it as often, buying it to see it go underused can be a tremendous overspend. For that reason, crane hire services might make more sense. For most kinds of industrial equipment or machinery, there exist hire services to stop you from having to buy to meet temporary needs.
Another major source of overspending that will take a little more work to fix is having more space than you need. This is especially true as of late, given how many companies have had to downsize and rely on remote workers. There’s no point paying for lots of space that you’re not using. If you don’t see yourself increasing the labour force present in the office any time soon, then it might be time to look at downsizing, whether this means leasing a different property or even selling an existing property. Proper planning must go into the relocation efforts to ensure you don’t spend too much there, too, of course. If you can find tenants, subletting space can help you turn that overspending into a small revenue stream, however.
Your internet services
You might think that your internet service is serving you just fine and it might be true that you’re not experiencing any issues beyond the normal. If you have reliable service, it might be worth paying more to keep it. However, if you’re not getting any kind of advantage in the service itself, then it usually doesn’t really pay to stay loyal to your internet utility providers. Every time your contract comes up, it might be worth looking at other business internet providers to see what they have to offer. Often, new customers will get a discount that’s worth taking advantage of.
Marketing budgets can very quickly inflate if you’re not careful and sometimes it can be hard to measure just how effective they are, due to the many metrics across different disciplines and platforms. However, there are ways to make your marketing more cost-effective. You can, for instance, invest more in long-term organic marketing methods such as search engine optimisation and content marketing. Another way to better monitor your ad spending, especially online. Features like targeting and adjusting bids with Ai can make sure that you’re not spending more on advertising than you should, and spending on ads that have the best chance of actually reaching and converting your customers in the first place.
This is primarily a concern for retail and eCommerce businesses, but any business that sees goods or supplies travelling and being stored needs to consider how they can make that process more efficient, as well. Most of the overspending here is done via loss. You might be paying for trucks to be on the road longer than they should be or you might be housing items in storage for longer than they should be there. All of these costs can be cut. For instance, telematic GPS devices can help you find where your drivers are being inefficient and help you better plan routes to cut down on journey times. Meanwhile, a digital inventory system can help you track where items are and help you see which are lowest in demand to stop you from stocking as many of them.
Of course, the cash flow of different businesses in different industries is likely to look very different. Consider all of your own expenses and which of them might be getting more money than you really need to spend.