Almost every industry has been affected by the COVID-19 pandemic. While some companies have thrived in the past 12 months, others have struggled to survive.
Regardless of the bracket that your business falls into, you could strengthen your company’s finances by decreasing your outgoings throughout the year.
To increase your company’s annual profit margin, read the below top tips on how to reduce your overheads in 2021.
Find a More Cost-Effective Workplace
An office or commercial lease will likely take a chunk out of your annual profit margin. If so, you might need to consider switching to a more cost-effective workplace.
As many of your employees might have been forced to work from home throughout 2020 and beyond, you might have realized your business can operate successfully without an office. For example, you could close your office down altogether or downsize to a smaller environment.
Remember, the neighborhood you pick for a workplace can determine the price of a lease. Therefore, you could slash your overheads by looking for a similar office in a more affordable location.
Downsize Your Team
It is never an easy decision to let one or more employees go. However, if you want your business to survive and ensure your many employees have jobs during these uncertain times, you might have no other option but to downsize your team.
Staff salaries will account for a large percentage of your company’s overheads, which is why trimming your team might be a smart business decision.
Switch to a Cloud Digital Asset Management Solution
Businesses in various industries use on-premises digital asset management (DAM) solutions in server rooms, office desktops, or a dedicated data center. However, it will require time, effort, and money to install and manage the hardware and infrastructure.
However, a cloud based solution is a smarter alternative, as you can scale it to match your company’s storage requirements. Plus, you can store digital files in various formats within a secure, central location.
So, you will only pay for the storage you need, and it is a maintenance-free and secure service, which can take the pressure off your IT team.
Renegotiate Contracts ASAP
If you haven’t reviewed contracts with clients, suppliers, or third parties in recent years, there is no time like the present.
As your company’s needs might have changed, you could cancel one or more contracts that no longer complement your business. Also, you might need to renegotiate a contract with a supplier to secure a better deal.
If they aren’t willing to do so, look for a provider that can offer the same or a similar service for a better rate.
Rent Equipment Over Buying
If your business is tight for cash at the moment, rent equipment over buying it. By doing so, you can avoid upfront payments on computers, smartphones, and other hardware.
It will allow you to enjoy all the benefits of the technology without the large investment, which is ideal if your business is facing financial uncertainty.
Skip Employee Annual Bonuses
Annual bonuses should only be provided to employees when your business earns a large profit.
While your team might have their hearts set on a cash bump, they would much prefer their jobs at the end of the year.
If your business has struggled to reach its annual financial target, you must ensure every penny earned is pumped back into your brand.
When the business yields a bigger profit in the future, you can then reward your hardworking team with a well-deserved bonus.
Also, bonuses should be based on an employee’s performance and not their time served. If you do plan to provide your employees with bonuses this year, it should be presented to those who have gone above and beyond to help the business succeed.
Switch to Annual Subscriptions
Most software companies will provide annual customers with a discount. For example, if you choose to pay yearly, you could receive one to two months free.
Multiple annual subscriptions could add up to a great saving, which you could inject back into the business.
Review Your Business Insurance Policies
Most companies will have various insurance policies in place, such as employers’ liability insurance, business property coverage, or product liability insurance.
However, it is a smart move to review each insurance policy, as you could be over-insured, or you might have duplicated coverage.
Some insurance providers can even consolidate insurance policies, which could reduce your company’s outgoings.
Embrace Low-Cost Marketing Strategies
TV advertisements, PPC campaigns, and sponsored social media posts can all cost a substantial sum. If your current marketing efforts are eating into your annual profit margin, you might need to embrace various low-cost strategies.
Attract and retain customers by:
- Building a large email list and sending compelling newsletters to subscribers
- Run attention-grabbing, organic social media campaigns
- Master networking
- Introduce a customer referral program
- Encourage word of mouth
Also, reach out to journalists and bloggers with a feel-good angle or a company news story, which could help you generate free media exposure.
Embrace Innovative Automation Tools
Various automation options can help your business to become more cost-efficient.
Different platforms can streamline and automate monotonous, manual tasks, which can free up your employees’ time to focus on more profitable projects.
For instance, you could introduce:
- Social media automation
- Appointment scheduling software
- Cashflow management tools
Automating mundane tasks could also improve your employees’ job satisfaction, which could lead to a greater passion for the business and an improved work ethic.
Every business will have unavoidable expenses. While it might not be possible to cut many from your budget, there are actions you can take to lower your overheads each month.
For example, you might need to introduce new technologies, adopt more affordable marketing strategies, or review your current contracts, policies, and subscriptions to save money throughout the year.
Many small savings could make a big difference to your annual profit margin, which could help your business reach its financial goals with ease.