Several criteria define an unhealthy business, but the most important and recognizable one is being unprofitable. if you are making a loss, you have a problem that needs to be fixed quickly. Unless, of course, if you have an endless reserve of cash to fund your business.
New businesses in most cases do not make a profit until after 2-3 years. During this time, you will have to master the art of penny-pinching to ensure survival.
But more than just surviving hard times, going lean can help save your organization a lot of money.
Here are a couple of timely hacks you can use to save money for your business:
Reduce Staff Expenses
While you need to create the best working environment for your staff, cutting down expenses is crucial if you want to save money. Here are some smart ways to reduce staff spend.
- Outsourcing: Take a moment to consider how much you spend on salaries, office space and insurance for your staff. If it seems you’re spending too much, that is a clear sign that you should be outsourcing.
One of the easiest ways to do this is to start with non-essentials like graphic design, website design, PR personnel, etc. As long as it is not needed for your day-to-day, you should outsource it.
- Hire Inexperienced but Intelligent People: Hiring experienced hands comes at a cost; a sometimes expensive cost. And while there is a case for hiring experience, money pinchers are better off looking in the opposite direction.
Recent graduates have the advantage of being hungry for achievements, willing to learn and caught up on the latest technology. You also get a bonus of only paying entry-level salaries.
Other ways to maximize your staff output include hiring interns, reducing meeting times and having shorter working days or hours.
Apply for Tax Credits.
Tax credits and deductions are incentives that governments offer to organizations for doing certain activities.
Although they are similar in that they reduce the overall amount of tax you have to pay, they are deducted differently. Tax credits are more beneficial because they are deducted from income before the gross before-tax income is calculated.
Some of the tax credits you may be eligible for are:
- R&D tax credits: this type of tax credit is usually given to organizations that actively participate in innovative work.
Here, companies are given tax credits on their R&D spend; with R&D tax credits, organizations can recoup up to 33.35% of their R&D spend. It is mostly restricted to SMEs as an incentive to pursue technological advancements.
- Welfare-to-work tax credit: organizations that hire employees who would otherwise have not been able to get employment due to specific reasons may be eligible for this tax credit.
Giving jobs to people with educational issues, disabilities or criminal records helps them improve their lives and incorporate better into society. The government, in turn, rewards you for that by giving you tax credits.
- Employee-provided childcare tax credit: If you have employees who have children, paying their childcare expenses can be a source of tax credits for you. In the US, companies are eligible for up to 25% of their expenditure on childcare expenses as tax credits up to $150,000.
There are a lot of other tax credits and deductions available to companies; with some peculiar to specific industries. You can consult a tax expert to help out in finding ways to pay the least possible tax.
While going green may be a fad to some people, it actually has great potential for savings. Going green simply means reducing the negative environmental impact of your company, that is, your carbon footprint.
One of the most important aspects of going green is energy efficiency, which implies using as little energy as you can to achieve tasks.
Attaining an energy-efficient organization will help reduce utility costs significantly. Some of the small changes you can make to reduce utility costs include:
- Using energy-saving bulbs
- Reduce the use of paper
- Stock your kitchen with glassware instead of paper or plastic.
If your company consumes a lot of energy, then you should seriously consider using green energy to power some of your processes.
Although the initial spend may be high, studies have shown that in the long run, you will spend less money maintaining it.
Make Use Of Modern Marketing Methods
The internet offers a broad range of marketing options that can yield a high ROI when expertly executed.
Some of these methods (email marketing, content marketing, SEO, SEM, etc.) can be done free of any significant financial investment. The only kind of investment you will have to make is your time – they usually take some time before producing tangible results.
A smart move is to curate an email list of your current customers and then use that to offer them a referral reward or loyalty privileges. More often than not, it is an excellent way to drive sales for a limited period.
Social media marketing is another exciting prospect for both small and large businesses. It can significantly help increase the reach of any business bringing you close to potential clients.
Facebook, the largest social media platform, has over 2.4 billion active users worldwide adding 500,000 more every day. Although most Facebook users are end consumers, it is excellent for both B2C and B2B marketing.
In fact, a report showed that it was the most popular platform for both B2C and B2B companies.
Saving money in your organization will require you to change the way you do a lot of things. With the information you now have, you can start taking those little steps towards creating a lean organization.