9 Ways to Stay Profitable by Cutting Business Costs

9 Ways to Stay Profitable by Cutting Business Costs
Even in the best of times, small businesses, like all businesses, must maintain fiscal preparedness for potential broad economic downturns. That includes finding expense categories that can be trimmed, tightening up operational processes, and improving overall business management efficiency.
Fortunately, there are many ways you can help position your business for sustainability through uncertain economic times, by lowering your normal routine operating costs. Use the cost-cutting recommendations below, suggested by American Express and other global small-business financial experts, to help your business stay out of the red regardless of external circumstances.

1. Outsource tasks that cost too much to do in-house.

Outsourcing is an excellent external resource for small business owners, that allows you to capitalize on options for getting work done without the monumental investment in recruiting, hiring, onboarding, training, equipping, officing, liability insuring, developing, and paying employment benefits for another employee. So, consider reaching out for help from local freelancers and other contractors to do short-term projects or part-time regular work for your company.
Increasingly popular outsourced services suitable for small portable restroom rental vendors include payroll, accounting, HR, virtual assistant services, cleaning, mechanical repairs, and transporting, among others.

2. Reduce your utility costs.

Cutting monthly utility costs can cumulatively reduce operating costs significantly.
• Find electronic devices and appliances that consume electricity, and eliminate as many of those as possible without compromising operational efficiency.
• Replace light bulbs and fixtures and appliances with updated models that use less energy.
• Caulk and apply weather-strips around office and facility windows and doors.
• Have wall areas and roofs gauged for effective R-values and have issues corrected.
• Use window blinds or plant shade trees to filter the direct sun.
Changes that don’t require any modifications include these:
• Identify areas that are being unnecessarily lit for hours per day and shut down the lighting.
• Maintain temperature controls at reasonable levels throughout all seasons.
• Replace trash hauling services with a less expensive alternative, if possible.

3. Utilize the workspace more efficiently.

Reconfigure your storage and workspaces to allow more efficient functioning in and around those areas. Assess the practicality of your supply and equipment inventory storage, unit prep and repair facilities, office spaces, and traffic paths. Make sure you’re getting maximum use from every cubic foot.
Consider, renting, leasing any industrial or administrative spaces you can do without, or closing them off to save utility expenses and possibly some portion of your liability insurance costs.

4. Ask your regular vendors for discounts.

Like the majority of small business owners, you probably routinely do business with the vendors you’ve come to find most reliable to provide you with competitive value in products and services. Still, there is often room for savings.
Keep in mind that vendors are usually not inclined to offer long-term customer discounts unless you ask. Suppliers often can provide a discount for preferred repeat customers, so it can often pay to ask.

5. Cut your costs of using credit.

Switch to credit cards that provide cashback or discounts on purchases or lower interest rates. Extend loan repayment terms on as many outstanding debts as possible, depending on circumstances and interest charges.
Stay aware of your credit ratings with the three reporting agencies (Equifax, Experian, and TransUnion). Follow the steps to improve your credit rating as needed to qualify for reduced interest rates, and switch high-interest credit accounts to credit providers offering lower rates.
Check with the SBA, to find out what programs your business may qualify for to help you cut your costs of carrying
debt.

6. Discontinue under-performing revenue channels.

Ambition, experimentation, and product diversification are all good things. However, in a small business, it makes sense to be very conservative in maintaining revenue lines that are not performing well enough to exceed their total cost. Recognizing when it’s time to let go of losing product or service lines can be just as important as trying out as new ideas.
Minimize waste in money and time by eliminating peripheral offerings that are not adding value for your customers and/or are not adding enough to your overall profit margin to make maintaining them worthwhile.

7. Migrate to cloud services, and use open-source software design alternatives.

Cloud computing can cut business information management costs by half in many cases! Plus, you can seamlessly scale it to pay only for what and how much you need — on demand. By migrating your IT systems to the cloud, you can avoid major annual outlays for platform packages and whole suites of software of which your business may only use one or two applications.
Further, before you spend big on new custom software or a pricey subscription package, check for free full-scope open-source applications that may fit your needs in your portable restroom service business. With some of today’s user-friendly open-source options, a novice in-house IT person may be able to create what you need free of the application cost.

8. Scrutinize your inventory management system.

Evaluate your inventory control processes, to determine if you can cut your costs without compromising product or service quality. Look to reduce the amount of inventory you’re carrying in some items, and examine costs to figure out if you should be getting stock of some items at lower prices. See if you can obtain more cost-effective shipping arrangements.
Understandably, there can be a strong sense of desire to stick with a vendor with whom you’ve been doing business for a long time. But, doing something one way for a long time, of course, does not necessarily mean it’s the ideal way for you or your business to succeed over time.
Always look for ways to save money, while preserving quality and relationships. In that interest, ask your regular vendor what they’re able to offer, before moving on to get one or more comparable products at better prices elsewhere.

9. Promote working remotely.

It may be time to assess whether or not it is necessary to have everyone working in the same building or even if they all need to report to the business office daily at all. Consider the enormous percentage of overhead your company may be able to save by permitting as many employees as possible to work remotely.
Research has shown conservatively that telecommuting can increase productivity by at least as much as 13 percent, according to the Harvard Business Review. Working remotely was also found to dramatically increase productivity and to reduce attrition by up to 50 percent, in a large study by Stanford University, as reported by Inc. magazine.
So, it may be time to conduct a needs analysis in this area of your portable restroom business operations and see how much you can save by altering workplace arrangements for both administrative and field employees.

Where should you NOT cut back? Answer: Marketing.

When times are tough, too many small business owners instinctively decide that the first thing that must go is marketing. They slash or even eliminate their marketing budgets, viewing it as a discretionary expense, instead of as an investment in generating revenues.
Of course, more revenue is precisely what your portable restroom rental business needs more than anything else to sustain it through lean economic times. Like you, consumers are also looking for ways to save money and maximize value during such times. So, it’s a time for you and your team to be creative in helping them see the superior value in using the kind of service you provide and how your company provides the best value in your local market. And, that requires some marketing efforts.

Your Bottom Line

Lots of business owners are instinctively triggered to raise prices as their sole method of increasing profits. But, as you can see above, there are abundant alternative approaches to realizing more sufficient margins through reducing costs. There are vast benefits of cost-cutting during strong growth periods as well as in national downturns, such as the current economic shutdown due to the coronavirus pandemic.
Yes, raising prices is one way to increase profit margins. But, when that isn’t feasible or doesn’t go far enough to expand margins sufficiently, a combination of cost-cutting measures is advised. Those should include taking advantage of ways to maximize benefits from available discounts from all suppliers and insurers, outsourcing as much as possible, optimizing cyber services, and using credit more effectively, among others, and perhaps along with some deeper cost-cutting measures, as needed. Altogether, more or less aggressive cost-cutting in your portable restroom rental business budget can very often make up the critical difference between monthly profit and loss.

Resources

https://www.americanexpress.com/en-us/business/trends-and-insights/articles/10-ways-to-cut-costs-for-your-small-business/
https://hbr.org/2019/08/is-it-time-to-let-employees-work-from-anywhere
https://hbr.org/2014/01/to-raise-productivity-let-more-employees-work-from-home
https://www.inc.com/scott-mautz/a-2-year-stanford-study-shows-astonishing-productivity-boost-of-working-from-home.html
https://www.thebalancesmb.com/business-thrive-tough-economy-2948298
https://www.americanexpress.com/en-us/business/trends-and-insights/articles/10-ways-to-cut-costs-for-your-small-business/
https://hbr.org/2014/01/to-raise-productivity-let-more-employees-work-from-home
https://www.inc.com/scott-mautz/a-2-year-stanford-study-shows-astonishing-productivity-boost-of-working-from-home.html

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