Article Contributed by Maree Kyle
When it comes to increasing profit margins, business managers are taking a risk if they don’t look at this goal from two different angles. On the one hand, increasing sales will always create potential for net profit growth. But, increasing expenses can eat away at that those gains simultaneously.
Instead of focusing on growth at all costs, executives would do well to spend time evaluating where they can cut costs immediately. Savvy decision-making when it comes to reducing costs can actually lead to an increase in your organization’s profit margins, even if sales remain the same. There’s a fine line between spending enough to help your business thrive, and spending in ways that eat up your revenues. The best business managers will figure out how to toe that line and limit spending to the most important areas. And as organizations grow, cost control becomes even more essential because nominal wasted expenses can be multiplied across several departments and branches of the business.
With that in mind, here are some ways you can cut down on costs for your business and increase your company’s ROI.
Buy in bulk
There are plenty of warehouse-style stores that sell common office supplies and other products in bulk, and for a good reason: Businesses understand that bulk purchases can help them save money, and those stores can sell more by increasing their sales volume and catering to other businesses. Whether it’s toilet paper, cleaning solution, ballpoint pens, or other necessary office and janitorial supplies — particularly those disposable in nature — buying in bulk can offer great savings. The initial bill might seem pricey, but the long-term savings will make the purchases worth your while.
You might also look into establishing a relationship with one or more factory wholesalers in your area to procure similar bulk-order deals.
Managing your space
Bulk purchasing is great for helping businesses save, but if you’re looking to lease out more space for storing it all, you may want to reconsider. Generally speaking, the less physical property you need to run your business’s operations, the better. This reduces rent overhead and decreases monthly costs, and the savings will often be much greater than whatever you would save by stockpiling goods.
Become a competitive purchaser
When it comes to finding suppliers for various items, businesses wield a lot more power than individual customers. Those suppliers will be more eager to acquire your business and keep it for the long run. That means they’ll lower rates to vie with other competitors and will be more willing to make sure you get the best deal possible. Playing these competitors against each other may feel dirty, but it’s the best way to cut costs and reduce your company’s overhead.
As companies grow, the task of cutting costs can become vastly more complex, especially when considering personnel management, benefits programs and other expenses that can eat into profit margins. But some cost-cutting moves can be applicable to any business, even a one-man operation. No matter what size of organization you’re dealing with, start implementing these savings strategies now to develop good habits and minimize your unnecessary expenditures.
About the Author
Maree Kyle is a writer who enjoys traveling, networking, and giving helpful business advice.