The current health crisis has impacted businesses all over the world and smaller businesses are going to take the brunt of the damage. In the United States, one of the most economically stable countries in the world, as many as 7.5 million small businesses are in peril of shutting down due to the fall out.
You need to do everything you can to keep your own enterprise afloat. And one the best ways to do that is by reducing your operational budget. Doing so can prevent you from letting employees go and perhaps even save your company from shuttering permanently. Here are 5 ways to streamline your operational costs efficiently.
Map out Your Finances
You won’t be able to control your finances without knowing the full extent of your company’s expenditures. Collect all your company’s receipts and financial documents and determine exactly how much your small business is spending. This information will help you find out if you’re overspending on certain things. Some expenditures may even be rendered redundant by the new realities imposed by the health crisis. Identify which parts of your operational budget you can eliminate entirely so you can free up your finances for more important costs.
Acquiring new equipment and materials can be very expensive. Why spend more than necessary when you can get secondhand equipment that works just as well as brand new? For example, when you’re outfitting a new office, instead of opening an expensive furniture catalogue, check out if you already have equipment in storage or if another company is selling. If you have a warehouse, used racking and shelving can reduce your costs even more. However, you also need to be careful when buying previously used equipment. Purchase them only from reliable sellers and ensure they’re in working condition.
Experts calculated that in an office setting, the average worker gets 185 square feet. That space may seem excessive especially if your rent or lease is eating up too much of your operational budget already. Try to make the most out of your existing office space by imposing office sharing policies and introducing mixed-use spaces. Or you can move your entire operation to a smaller space and save even more. You could also regularize teleconferencing and work-from-home arrangements, further decreasing the need for expensive office spaces.
Decrease Supply Spending
When your company manufactures products, you might consider reducing your supply costs to ensure the longevity of your business. Take a look at how many units of products you actually sell as well as the amount you plan on selling in the future months. Buy only the amount of supplies you need to meet this quota and no more. A great way to make sure you don’t have to buy more supplies than necessary is by not overselling.
You may have misgivings on reducing your operational budget but streamlining it may be your best option in prolonging your company without making the cruel decision of letting employees go. It can also help make your business more profitable in the long run.