With the economic fallout from COVID-19, reducing your operating costs has never been more important. A full company overhaul isn’t necessary to cut costs, and the reality is that it’s not just one big thing that will solve all your problems. Rather, you’ll have more chance of reaching a meaningful savings goal by combining several smaller goals. Here are some good starting points:
1. Reduce Energy Consumption
From the shop floor to the business office, energy consumption presents a significant expense in America’s manufacturing community. By conducting HVAC maintenance, repairing leaky air compressors, and scheduling strategic equipment starts, you’ll see positive results in your bottom line. And don’t forget to unplug electronics when not in use and ensure the lights are off when no one’s there. Consider programmable thermostats — they’re proven to save at least 10% annually on your climate control costs.
2. Negotiate with Suppliers and Freight Carriers — Even Competitors
Yes, you can and should negotiate with suppliers and freight companies you have a long-term relationship with. Take advantage of your position as a manufacturer and “essential industry” to ask for better rates. And if you band together with a competitor or two to consolidate purchases, your bargaining power increases greatly.
3. Save by Outsourcing
This one can be applied in so many situations, and so here’s a list of some of the many aspects of your business you can outsource: your HR department or any department that isn’t part of your core operation; short-term, one-off tasks; bookkeeping; IT operations; many administrative tasks; payroll processing.
4. Review Your Insurance
Business owners who allow their insurance to renew automatically may be paying more than they need to. In addition to reviewing insurance prices, business owners should consider bundling coverage. Insurance rates and algorithms change frequently, so it’s best to be hands-on in this area.
5. Buy (Gently) Used Office Equipment
Instead of buying new laptops, computers, faxes, or any electronics in general, you can buy slightly used ones for way lower price to cut costs and expenses. You won’t notice any difference in performance.
6. Move to the Cloud
For data storage and computing, a move to the cloud can provide significant savings. Eliminate the need for onsite storage infrastructure and hardware costs, enhance scalability, and facilitate remote work and collaboration.
7. Modernize Your Marketing Methods
Build a customer email list and update it every month, then implement a referral program. A recommendation from a customer is more likely to result in a sale than some other traditional marketing methods. Use case studies and publication coverage to boost your public profile and enhance online marketing.
8. Review Profit & Loss Statements Regularly
Knowing where every single dollar goes makes cutting costs much easier. While analyzing expenses, you’ll find points to negotiate with service providers. Not only that, you can cut unnecessary services and expenses completely. This works for any business and can begin immediately.
9. Reduce Recycling Costs
You may already be in the recycling business, but if not, you may be able to reduce the costs of recycling wood and other waste materials in your plant by coming up with creative ways to use these items. You could use wood waste for heating fuel to heat your own plant, for example, or you could even create new products like mulch or animal bedding to sell to others.
More Savings Opportunities
There’s just not enough space here to describe every potential savings opportunity. What follows is a collection of options you may want to consider:
• Pay invoices early to reap the benefits of discounts and the goodwill of your suppliers
• If you rent land or space, talk to your landlord about the terms of the lease
• Move from print to paperless
• Ditch your landline and go online
• Seek guidance from your own team in ways to cut expenses
By implementing even just a few of the cost-saving ideas outlined above, your company can be on its way to a more profitable bottom line.
