Financial management

5 cost-cutting tips to keep more money in your business

- June 8, 2023 3 MIN READ
cost percentages going down

Lately, we’ve been overwhelmed with a seemingly endless stream of news covering company layoffs, the possibility of recession and a struggling stock market, so it comes as no surprise that everyone from small businesses to top-tier CEOs are looking to save money quickly and get their cost-cutting right, writes Ben Zyl, CEO and co-founder of Waave.

In today’s climate, with employee wages, goods, development, marketing, and insurance costs at an all-time high, even the smallest of savings can accumulate to make a sizeable difference.

Where can businesses cut costs, improve their margins, and ultimately see more money in their pockets at the end of the financial year?

Consider these five tips.

1. Execute a software audit

Think about how much of the software you pay for, you actually use. Take stock of all the marketing systems, development softwares and employee platforms you’re currently subscribed to.

We’re not suggesting you stop using these, but often businesses see a duplication of software. For example, two of the HR or social media platforms you’re subscribed to may do very similar things.

It’s worth combing through what you use and deciding what you can live without.

2. Negotiate vendor contracts

Did you find a platform or tool you’re not completely utilising during your software audit? When businesses first sign contracts with vendors, there are grand plans to leverage all their features to get the most bang for buck. Unfortunately — and often due to a lack of resources or time — these platforms fall by the wayside and the money that’s being forked out for a ‘premium package’ is going down the drain.

If you don’t want to get rid of a service entirely, look at whether you’re over-committing. If you think you’re paying too much for a specific service, now is a great time to negotiate new contracts with your vendors. This can be a big money saver, particularly for the light lift that it is.

3. Invest in the right technology

One of the most obvious ways technology can help businesses save money is by reducing material costs. From cloud computing to online documents and document signing, tech can cut costs by taking everything digital.

But there’s more to it. Businesses can save up to 70 per cent of costs with automation. Tasks which are otherwise laborious and time-consuming, like invoicing or entering information into a database, can now be automated. This removes the need for employees to spend hours on repetitive tasks and instead frees up their time to focus on more important projects — ones that can directly affect revenue.

4. Amplify customer acquisition channels

When it comes to customer acquisition, we don’t always need to reinvent the wheel. Often, looking at a few simple customer statistics can help you optimise what you may already have in place.

Take online retail as an example, where about 70 per cent of online shopping carts are abandoned (on mobile, it’s a staggering 86 per cent). A nurture series of a few simple emails could turn some of those customers from potential to paying. In fact, abandoned cart emails are said to increase online sales by 20 per cent.

Look at what your data is telling you, and think about what extra levers you can pull to engage your customers more effectively.

5. Stop paying unnecessary merchant fees

Merchant fees are a business killer. If you’re a business that accepts payments through a payment provider, you need to know what your ‘real cost of payments’ is.

All payments, particularly card payments, are costing businesses in Australia around $3 billion a year in merchant fees. That’s because a single payment can incur a whole raft of interchange and other fees. These billions go straight to middlemen like the big card providers, and out of the pockets of tax-paying businesses that are our economy’s engine room.

The best thing to do is to ask for a breakdown from your service provider of what fees are incurred across the year and per transaction, and tally this up. Then look at negotiating terms and explore alternative payment methods. Australia’s Open Banking framework is creating new avenues for direct transactions that cut out the middleman fees. A few changes could save many thousands.

This article was first published on Kochie’s Business Builders, read the original here.

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