There are two paths that small businesses can take to profitability – revenue growth and cost containment.
Naturally, revenue growth sounds better because there’s no upper limit, unlike the hard bottom of cost containment. However, if expenses are rising in step with your income, what have you gained?
Take a moment ASAP to step back and revenue your finances. There may be areas where you can trim or delay cash outlays before you scale up any further. In that search, be careful NOT to cut into your most mission critical source for value creation.
Cut out your rent
What is your office doing for you? In the old days, the words “business” and “office” could be used interchangeably. Since the internet happened, offices have stubbornly fought off obsolescence. Today 81% of conduct online research before making a purchase and 51% prefer to shop online.
This collective cultural mind-shift is one of the reasons why 69% of entrepreneurs start their small businesses at home. It also explains why small businesses make up 47% of coworking spaces, 80% of which now offer private offices. An office doesn’t have to involve an expensive commercial lease.
Cut out desk phones
Like the old-fashioned office, the desk phone used to be a symbol of success. The cost and headaches of setting up a phone system were like a painful badge of honor. In the 21st century, smarter and more agile businesses are running all operations from apps on their smartphones, including the business phone system.
The Spoke app instantly gives you capabilities for conference calling, hunt groups, local numbers everywhere, separate billing for work vs. personal calls, easy transfers, and an AI receptionist who answers your calls when you're busy. Why tie up $20,000 for a small business phone system instead of spending just a few dollars a month for an app that all your employees can access on their own phones? Spoke represents the next generation in business phone systems and there's no point in holding onto legacy hardware.
Cut marketing expenses
You have to generate a strong marketing presence or no one will find you and attrition will eat your customer base. You don’t have to pay big bucks for a big market footprint, though. Social selling techniques will put you in control of the most effective tools for marketing and sales in the modern world. Many of them, such as warm calling and social networking, are essentially costless.
Marketing visuals that used to be expensive, such as logos, infographics and videos, can now be created at very low costs using open talent markets. Don’t cut back on marketing efforts, because they are you lifeline to new prospects. Just pay less and do more with the marketing budget you have.
Cut projects that aren’t working
Too many small business owners keep funding projects that aren’t bringing back sufficient returns simply because they don’t like to think that they wasted money. Set metrics early and then follow through on cutting your losses if they don’t deliver. Don’t take it personally. Some things just don’t work out due to timing or a hundred other variables outside your control. Too many small businesses run out of cash by pouring out good money on failed projects.
Cut the little things
You may not see any big expenses where you can safely make cuts, because you might be sinking from a thousand little leaks. Cash wasted on little things like office supplies, shipping charges, credit card handling fees, etc. are adding up fast. There’s an old saying, “You have to spend money to make money,” and it’s usually said by people trying to justify an unnecessary expense. Your people and your quality deserve top priority, but beware of expenses in every other category that are only making you feel better while your cash leaks away.
Don’t cut into the user experience (UX)
What do people love about your company? Chances are it’s not what you think it is. Blackberry produced the first real smartphones and dominated the market by 2009. Users were so engaged with their phones that they were called Crackberries. It all came crashing down with the creation of the app ecosystem, let by Apple and Google. Blackberry didn’t look far enough ahead and adopt the new technology. By 2015, they have virtually no stake in the market. This year they are trying to stage a come-back, using apps on Google’s Android OS. Don't follow that path.
The central message
All of these suggestions on small business expenses to cut derive from one central concept. Don’t be so in love with what you are doing now that you lose sight of why customers love your brand. Keep the conversation going with your fans and brand advocates about what they like. It certainly won’t be your office or your desk phones. Strip down the investments on mechanics so you can spend more on the UX. Customers will let you know when there is some quality in your brand’s personality that they admire. Concentrate on how to make their lives simpler and more magical. All you have to do is stay on that path and not get distracted by your own success.