When it comes to setting up a business, positive results take time to appear. From the formation of the company, with the initial investment expenses, up to a period of between 6 months and a year, the income obtained will not compensate for the loss. Well, in addition to supposing a negative growth from the beginning, they will be accompanied by a series of unavoidable fixed expenses.
As the business begins to operate and we increase the positive cash flow, so will the expenses, diminishing our profits. It is a problem of whiting that bites its tail and tends to be very greedy. Which leaves us with the dilemma of how to prevent the business from ending up devouring itself?
Reduce fixed costs
The best way to survive this economic bleeding that every company suffers from birth is to find ways to reduce fixed costs. However, we must be cautious in the way we take this step because we can sacrifice the future of the business in exchange for saving us some hard ones. When quality is affected by cuts, expenses will be reduced as well as revenues over time, leading to the same situation as before, but in worse conditions.
So, if we have decided to reduce the expenses of our business, we will have to see what elements of the company create the biggest hole in our accounts. And we will realize that these come from the rent, the suppliers and the salaries of our staff. It is time to ask the crucial question: what am I willing to give up for the benefit?
Track expenses diligently
We already know the risks involved in altering quality, so we must be very cautious about the issue of suppliers. Large companies have relocated their factories in countries that allow them to reduce production costs considerably, but the international press and humanitarian associations are calling attention to this fact because of the working conditions they subject to workers – minors, buildings unsafe and a long etcetera -, more typical of a Dickens novel than of the 21st century. Something similar happens in the service sector; Current technological applications allow a large number of jobs to be carried out from places in the world at prices much lower than those that would cost if they were located in the mother nation of the company.
Manage variable costs
I do not want to enter into moral debates about the suitability of this type of current mercantile operation, but rather to draw attention to what is the tendency when it comes to moving forward business in the current era. The very quirk of the business world forces us to look for the best way to optimize the results. And from the examples above, we can draw two very useful lessons for SMEs and self-employed workers who want to know how to reduce their expenses and take their business forward without harming the final result.
Invest in technology
The first conclusion we can draw is to diversify the center of activity. Not all tasks have to be carried out within the facilities of our company. It’s more; many of them are not directly related to the business objective. It will be much more useful and effective to delegate these tasks to other types of external services. In this way, we can focus on our work and let other professionals undertake a series of specific functions for which they are much better prepared. Sometimes, for wanting to save us money, we force the workforce to perform tasks for which they are not adequately prepared. That supposes a break and deconcentration in its rhythm of work, causing delays in the deliveries or presentations, overtime and demotivation labor. In other words,
The second conclusion is that technology allows us to reduce costs thanks to its speed, its permanent state of contact with the company and the fantastic advantages of its ubiquity. Let us think, on the one hand, that space is limited and expensive. It is no longer necessary to have square meters with digits in thousands to accommodate our workers. Formerly it was required to have storage space inside the facilities, but the computer revolution has managed to ensure that all those files and files can now be stored in the Internet cloud, external hard drives and other forms – physical and non-physical – of storage.
Benchmark against your industry
Now let’s put it into practice with an example. Let’s suppose that we want to have a secretary to provide excellent telephone service to our customers and perform management tasks of the company. Thanks to the virtual service of telephone secretaries, we can incorporate them into our company without the need to make reforms or modifications of the space available at present. On the other hand, its cost is substantially less than that of a natural person. Your work will allow other employees to develop their work without distractions, getting the most out of their work in less time. In addition, since they can organize the company’s agenda, the functions or meetings will be permanently updated, facilitating the organization of work without effort.
As we can see, the best way to reduce expenses within a business is to properly structure the workforce, delegate tasks that reduce the actual work time of employees and maximize the possibilities of technological means. This way of cutting costs will not only cause the benefit to increase proportionally, but it will also make us more competitive, which will increase the volume of sales.