3 Ways to Increase Profitability and Cut Costs
With cookies on the brain and forced family bonding on the horizon, it’s hard to prioritize your small business needs. But the holidays are not a time to slack off, especially when the longevity of your small business is at stake.
In a time when many new businesses last less than a few years, it’s imperative to keep a close eye on the bottom line. Whether you are switching to ACH payments, adopting accounts payable automation, or looking to automate accounts receivable, each well thought-out step could open the door to profit opportunities. After all, increasing profitability – incrementally or dramatically - is the key to long-term success.
Why You Should Cut Costs for your Small Business
Cutting costs is often a common way for businesses to see immediate revenue results. In tight times, a shrewd examination of how your business is spending money – and how it can course correct from overspending – can yield profitable and sustainable results.
First, enhance efficiency.
Maximizing efficiency can yield tremendous results in the battle to cut costs. Admittedly, it may sound a bit abstract, but once you turn your eye towards internal processes and resources, you can quickly see its impact on operations and costs.
Enhancing efficiency hinges on two notions: First, that you are knowledgeable in a majority of the business’s operations and how they are executed within the company. Second, that you are willing to institute clear, repeatable processes and technology to support them.
Take, for example, a very common business practice – the expense report. Most employees don’t relish the idea of creating and submitting one. The process of rounding up numerous (often paper) receipts, filling out a report, copying the report, turning it in, processing it, issuing a paper check for reimbursement, etc., can drain time from employees. While it may seem like a small amount, that time, amplified over a year, could translate into more valuable activities and results for employees if the entire process was simplified and digital. By bringing in technology, you can turn a time-consuming, onerous task into a quick, efficient process – leaving your employees with more time to spend on increasing profitability instead of paperwork.
Look into your top-three important business functions across all departments to see if there is room to streamline the processes around them. Employees represent a great place to start when trying to identify areas to add efficiency. Asking which tasks take up the most time for them or which ones are the most dreaded can quickly uncover problem areas.
Also, hand-in-hand with adding efficiency is the need for clear, documented, repeatable processes. Once you have identified the inefficiency and the “cure,” you can ensure the new process is adopted and sustained.
You have probably used Siri, Alexa, or Google to help with a simple task, right? Perhaps they’ve played music for you, scheduled a car appointment, or picked out a holiday present for your least-favorite aunt. In all of these scenarios, your digital assistant handled a mundane task so you were free to prioritize.
Automation stems from a similar principle – let technology take over an administrative- or low-yield task to allow a focus on more important items.
Many cloud-based technologies are available to automate tasks from bill pay to HR to invoicing and more. For example, Bill.com will “walk” each bill through the approval process with automated workflows. Instead of an employee physically shepherding each bill from desk to desk and continually following up on its progress, Bill.com will deliver the invoice to each approver, track the process, and pay the bill when approved by all reviewers. A task that would usually take days or weeks can be consolidated into a 50% smaller time frame, thanks to automation.
You have an important document being vetted by top management. Which would you prefer – 10 emails with 10 different versions of the document? Or one document which contains all comments and edits from all parties?
That’s the beauty of collaboration. It consolidates insights for documents, projects, processes and more and creates transparency. Instead of information held hostage in a silo, employees can work together across departments and disciplines to create more responsive communications and results.
There are multiple tools available now to enable business collaboration – from bill pay to reviewing documents or spreadsheets to project management. Asking colleagues for recommendations or starting with a quick internet search can yield some viable candidates.
We know it’s the holidays, but now’s the time to increase profitability! Take the time to follow these three cost cutting steps, and you’ll find yourself spending less time on manual tasks and more time earning money.