Keeping Costs Low in Business

Money is always an issue when starting up a new business.  You don’t want to overextend yourself and risk failing due to lack of capital.  More and more businesses are looking for ways to keep costs low while still giving customers high quality goods and services.  This can often be a challenge.  Many might wonder how you can create quality without spending excessive amounts of money.  “Time and money seem to be the two perpetual challenges every entrepreneur and business owner faces.”  So how to keep costs low in business while still achieving your goals of giving customers the extraordinary quality they expect from the product you are selling?

First of all, think about cutting production costs.  There are actually numerous ways a business owner can cut costs just by doing a little research.  Cutting costs doesn’t mean the quality of your product will be diminished.  For example, one might look at the supplies they are using to create their products and start there.  You might be using the wrong suppliers so think about using those that offer the same product at a lower price point.  It’s always good to constantly look at different suppliers prices.  Some might offer the same service you’re using for less money.

Another way a business owner can save money is by thinking about whether they need to purchase equipment to make their product or if it’s viable to rent such equipment.  Depending on the situation, one choice may trump the other.  For example, if your company needs to use a machine to manufacture a product on a daily basis, having your own might be the best idea.  On the other hand, if your business only uses such a machine on a one-off basis, it might be better and more cost effective to rent a machine when it’s needed.

Think about how many employees your company really needs to be successful.  Sometimes new business owners tend to overstaff because they feel overwhelmed and think more personnel equals more production.  Often, you can get the same production and quality of work out of a more limited number of employees.  Keeping quality high doesn’t necessarily mean overstaffing.  Think about how many employees are really needed to get the job done.  While sometimes employees aren’t busy all day due to a slow season, sometimes there’s just not enough work to go around so it might be wise to consider having fewer workers.  Sometime “fewer employees who are skilled and productive may still be able to accomplish everything the needs to be done in order to keep costs low and quality high.”  With all that being said, the number of workers you employ is often a tricky tight rope to walk.  If you have too few employees, they might get overwhelmed and not be able to turn over quality products on time but then again, that’s not always the case.  If you have the right employees that are hardworking, dedicated and motivated, sometimes less is more and this is a great way to keep costs down.

Think about hiring out rather than always hiring in-house.  You don’t always need certain types of employees on hand at all times.  For example if your business needs a lawyer, accountant or computer technician from time to time but not all the time, consider keeping one on a limited retainer or hiring for one-off projects.  There are other businesses out there that outsource their employees to other companies for specific projects.  This is a good way to keep costs down because you don’t need to keep these types of employees on your pay role and pay them every week.  This option is often an innovative way for a business to save money while still getting the work done that they need and offering their customers a superior product.

Think about redefining your office space.  Many new startups often have their employees work remotely from home.  You could also think about virtual offices or shared offices with other companies.  Businesses such as Emerge212 (http://www.emerge212.com/), offer programs exactly like this where companies can work from home but still use conference space in a shared office or utilize a receptionist when need be.  You can also register your business with a mailing address and phone number through virtual office space.  This way you spend the bulk of your time working from home and pay only a fraction of full-time rental costs.

One last thought is to be creative on a budget.  There are always inventive and resourceful ways to save money while still keeping up the production of a high quality product.  For example, think about ordering inexpensive business cards from a low cost printing company or try printing them at home on hard stock paper.  Use technology at its best.  Think about using free conference call services to have group discussions with your employees about the day-to-day tasks they need to be working on.

If you use some of the tips I’ve discussed here today, you’ll see it’s easy to still produce a high-quality product on a low budget.  Keeping your costs down, especially in your first year of business can often be the difference between success and failure.  Don’t overextend yourself because you see a big budget as a way to reach success.  Be smart about your money and the way you use it and you might be able to more rapidly grow your business and keep your customers happy while spending less capital.

Here are some articles you might want to check out about keeping costs low in business:

“Keeping Your Costs Down”: http://www.entrepreneur.com/article/177116

“Keeping Costs Down”: http://www.natwestinternational.com/nw/business-banking/business-guides/g59/managing-finance/keeping-costs-down.ashx

“Keeping Costs Down – 7 Things Every Business Owner Must Do”: http://leadersinheels.com/business/how-to-keep-your-business-costs-down-7-things-every-business-owner-must-do-part-5/

Until next time…