Save your bacon — how to cut costs and increase your profit
It’s easy to have your spending get out of control in your business. Just one more SaaS service, just one more digital course. Here are four strategies to help you reduce your expenses.
Quick Wins
Start by looking at your credit card statement for the last few months. Are you paying for any recurring services that you don’t use? Memberships to groups you don’t participate in, coworking spaces you never visit, magazines you don’t read and SaaS services you don’t use are all excellent targets.
Cancelling those services will have an immediate impact.
Also, stop buying digital courses you’ll never complete. If it’s not the right time for the course, and you don’t plan to complete it right this minute, don’t buy it.
Check your stack
For online service providers, one of the most significant expenses is software — usually SaaS subscriptions. These can add up so quickly until you end up just pissing all your profits and cash away, a little bit at a time.
Sit down and make a list of all the software you currently use, what you use it for and how much you pay per month. Once you have your list, ask yourself the following questions about each service:
Is this something I actually need to run my business, or is this a “nice-to-have”?
If you’re in a strong cash position, are very profitable and want to keep your “nice-to-haves,” then go ahead and keep them. BUT, if you need to get your profit and cash flow under control, consider getting rid of these services (at least for a while).
If it IS something you need, is there a less expensive alternative that would work just as well?
If you’re using Quickbooks Online, you can switch to Xero
CRM + Trello + BaseCamp + …? You could try a switch to Accelo.
There are always alternative options, and you might decide not to make a change at all. But it’s still worth having a look and ensuring that you have the best, most cost-effective systems.
Check your location
Are you paying for an office you don’t need? A coworking space you never go to? Rent is often one of the biggest expenses for any business. Take a hard look at where you’re working and what costs come with it.
If you have to have an office — could you move to a cheaper location? Or into a coworking space?
If you have a coworking space that you like, in theory, but never actually work there, could you switch to a virtual coworking group and get the same benefits?
Check your staff
This one is an emotional doozy, but it’s also where I’ve seen a lot of entrepreneurs get tripped up. Growing your staff too quickly might just be the #1 mistake I’ve seen entrepreneurs make.
It’s so easy to get caught up in the growth cycle and hire for the business you’re going to be running in the future, not the business you’re running right this moment.
Sit down and have a serious look at everyone on your team (contractors too). Did you hire a salesperson who isn’t bringing in enough sales to cover their salary? Did you bring a contractor on as a full-time employee, but you haven’t brought in enough sales to keep them busy full-time yet?
Need some emotional fortitude to get through this one? Check out Joel Gascoigne’s blog post at Buffer — he wrote a great post about his own emotional journey through layoffs after Buffer grew too fast.
Cut the right expenses
As you’re going through this process, trying to find some expenses to cut, make sure you’re cutting the right expenses.
If a service is offering a genuine value (and a return on your investment) to your business — don’t cut it. The point here is to cut expenses that aren’t generating money and aren’t delivering value.
So, that amazing copywriter you work with, who consistently writes sales pages that brings customers to you, screaming, “take my money”? She should stay.
The SaaS tool you use that’s invaluable because it saves you 50 hours a week, keeps you organized and helps you deliver fabulous service to your clients. That one gets to stay too.
The focus should be on making your business more efficient and effective and getting rid of the excess crap, not the good stuff.
Susan Boles is on a mission to help small businesses run simpler operations, so they can grow faster, and relax more. Founder/Principal at ScaleSpark
