Cyclical expenses are a fact of life for businesses. From an entrepreneurial perspective, one needs to spend in order to earn. But another fact of life is that resources aren’t perpetually available; a business needs to be smart with its finances in order for it to thrive.
So it’s not uncommon for decision-makers to seek ways to streamline cash outflows. But the path to efficient expenditure isn’t always clear-cut. Many small-business leaders need to get creative when controlling costs. Here are some ways they do it:
Cost reduction isn’t always straightforward, especially for smaller enterprises. It isn’t always as simple as reducing supply usage or acquiring cheaper raw materials. So if you manage a small or mid-sized business (SMB), you should explore other ways to manage your costs. For most SMBs, especially those that are still in the process of establishing their foothold in the market, controlling risk is the way to go.
Why control risk? Because it helps mitigate unnecessary costs. Lowering your risk profile improves your credit standing and, from an accounting standpoint, allows you to decrease your financial allocations for loss, damage, and error. That’s money that you would normally set aside in anticipation of unwanted costs that you can instead earmark toward procuring assets and improving your earnings potential.
Controlling risk is also a good way to set your business up for growth, as it promotes the judicious use of resources. It trains you to look at opportunities with ample skepticism. This kind of culture will leave its economic benefits for now and for the future.
Where does managed services come in? Simple. Managed IT services providers (MSPs) can help you deploy a powerful IT strategy without you needing to build an extensive IT infrastructure. You spend less on upfront costs and you keep spending less than you would with in-house IT in the long run. And what’s key is that it cuts your risk. Because you don’t need too much extra hardware, you don’t bear the risks of server management, upkeep, and an overutilized IT team.
Core comes first
For most SMBs, the core business functions are product/service development, marketing, product/service delivery, administration (executives, HR, accounting), and sales. These functions have a more tangible role in delivering products to clients and gathering earnings for the company. So it would be smart for small businesses to minimize resource allocations for non-core business functions such as IT, data processing, and logistics.
But just because certain business components are considered non-core does not mean that a growing enterprise should go without these. It just means that a creative solution should be considered in lieu of running certain business functions in-house.
To illustrate, most restaurants in the United States don’t have their own delivery teams but wish to make their products available for customers to enjoy from the comfort of their homes. So they outsource their deliveries by signing up for mobile food delivery apps like Grubhub, Doordash, and UberEats. These apps let restaurants send out food for delivery without them needing to invest in vehicles and manpower — which translates to savings.
IT is one of the easiest business functions to outsource because MSPs take advantage of the economies of scale to deliver beefed-up services on very lean payment schemes. So you don’t need to worry about losing function when cutting out or cutting down your IT department — you can enlist the help of an MSP to partially or totally take over your network and system needs.
Cutting down overhead
Another good place to look for cost-cutting is your overhead expenditures such as travel, utilities, and rent expenses. These kinds of expenses tend to pile up unnoticed and before you know it, you have another huge bill to pay at the end of the month.
Look into a managed services partner to reduce overhead costs. For instance, instead of buying and running a new server that your business likely won’t get to maximize until after a few years, you can simply outsource your data storage and backups to an MSP. This way, you get the same level of utilization without spending a cent of depreciable equipment, extra manpower, extra energy costs, and more.
Cost-cutting doesn’t have to mean sacrificing productivity. Stay productive and more with WhiteOwl’s host of managed services. We provide cloud-based business solutions, cybersecurity, business process automation, and software integration. Give us a call to learn more.