One of the biggest challenges that come with running a business is maintaining control over your operational expenditure (OpEx). Aside from the direct costs associated with the day-to-day production of your goods and services, you also have to cover other factors such as labour, office leases, maintenance costs, and utilities. These overhead costs can balloon when not managed properly, possibly impacting the way your enterprise generates profit and maximises cash flow.
In essence, your business must be able to determine ways to minimise its expenses without cutting corners on product quality. This article will discuss some of these methods in the hope that they will help your enterprise edge out the competition and better manage the cost of running a business.
Focus on Telework
The boom in remote work in recent years has been driven by health and safety reasons, but this shift in work environments might also be instrumental in reducing your enterprise’s operating costs. Depending on the nature of your business, you may want to rethink leasing office space and go fully or partially remote. Essentially, having work-from-home (WFH) policies helps your business lower rent expenses and minimise your physical footprint. On top of that, telecommuting entices employees who may find the WFH setup more advantageous and empowering.
One of the most popular tools for telework is cloud computing, which involves subscribing to a third-party service for hosting and storing workload, data, and apps. In-house technology can be costly to maintain, so some businesses opt for cloud services to support their internal communications. A cloud phone system, for example, can optimise the way you communicate with your team, whichever device they are on and wherever they are in the world. Using these tools will help you improve collaboration across your enterprise, whether it involves weekly meetings or project updates.
Invest in Automation and Technology
Incorporating automation for work-related tasks is a great way to optimise everyday operations, from inventory checking to payroll management. Generally speaking, investing in software, tools, and apps is a good idea since it drives efficiency throughout your enterprise. Aside from helping your staff cut down on time spent on laborious and repetitive tasks, automation allows you to reduce expenses associated with direct labour.
On a related note, relying more on technology may also help you reduce expenses associated with paper-based processes. Instead of spending a chunk of your capital on printers, fax machines, and landlines, you may want to consider going paperless—provided that it’s a viable option for your industry. Aside from reducing OpEx, digitising your operations brings you into the modern age, when screens are ubiquitous.
Consider Outsourcing Tasks
Aside from automating tasks, you may want to consider partnering with independent contractors for a portion of your daily operations. As your business grows, there may be tasks that are infrequent and don’t require the work of a full-time employee. Instead of allocating a budget for hiring an extra employee, you can hire a freelancer to do the job. For example, if you’re aiming to improve the look of your company website, you can hire a freelance web designer under a project-based contract. Or, if you don’t have the budget to hire an in-house marketing team, you can outsource your advertising and marketing needs to experienced third-party professionals.
That said, you should understand that aiming for the cheapest services possible should not be your sole focus. When enlisting independent contractors, you should be prepared to spend a bit more if you want high-quality work. Still, outsourcing should be a great option if you want to get the work done—especially for seasonal or project-related tasks—and not have to spend on labour expenses including payroll taxes, paid time off, and insurance.
Practice Energy Conservation
If an office space is an absolute must for your business, you may want to make it as eco-friendly as possible to help you save on utility costs. For example, you can look into more energy-efficient lighting and ventilation to keep your electric bill from ballooning. It would also be a good idea to encourage your staff to conserve energy through simple practices such as switching off the lights, unplugging devices, and closing water taps when not in use.
Broaden Your Scope of Vendors
Another reason why you might be spending more on operational costs is that you’re working with vendors that cost too much. As such, you may want to use a bidding process to identify the vendor who can deliver the requested output at a reasonable price. It may also help to be accurate and comprehensive when putting together your request for proposal (RFP) or scope of work documents to ensure that the quoted rate reflects your projected spending as much as possible.
Regularly Monitor and Reassess Your Expenses
When deciding to make changes to your operational spending, it’s also important to understand your historical costs and how they compare with the rest of the industry. Doing some market research may help you determine how much other companies are spending on OpEx and what you can do to keep your costs from rising beyond average industry metrics.
Aside from competitor research, you must also make sure to regularly track costs and gather data on the factors that make up a large chunk of your expenses. Periodic reassessments will help you establish a plan for saving on integral services without putting your business in jeopardy due to low quality. Additionally, tracking expenses will help you identify services on your bill that might be unnecessary.
Making the Shift to Optimised, Cost-Efficient Operations
As the owner of an enterprise, you need to understand the nitty-gritty of your operating costs and how to optimize them in order to run your business more efficiently. One way to optimize operations is to make changes to your work practices. Another option is to incorporate tools that are automated, intuitive, and easy to use. All in all, these steps are necessary for your business to stay competitive and make everyday work a lot more manageable, cost-efficient, and suited for 21st-century customers. Find out more about the benefits of automation for growing your business with tips from Online Success Genie.