Find Ways to Reduce Costs

One of dozens of strategies listed and linked to here:
How to Make More Money From Your Business


There are almost always safe ways to reduce costs in any business. By safe, I mean ways that do not risk a loss of customers. After all, you could stop heating your coffee shop to save money, but you wouldn't likely see more profits in the future. But if you do find ways to reduce costs without damaging your business, the result is often pure profit. If a baker finds a supplier that will provide his flour for $1,000 less per year, he just added $1,000 to his annual profits.

There are two other pages in this section which address ways to save money and so increase profits. They are:

Find Ways to Reduce Labor Costs - Firing people is not the only way to do this.

Reduce Overhead Costs - This saves money, and makes your business more secure as well.

Let's look at other ways to reduce costs, starting with an example from when I worked at a fast food restaurant over 25 years ago. As an assistant manager I was responsible for placing the orders for food and supplies (cups, cleaning stuff, etc). When I first started doing this I was amazed at how many thousands of dollars we spent on sauce packets, which included mayonnaise, ketchup and about three or four other types. I started watching to see how many of these the employees were handing out at the drive-through window with each order.

The employees were typically putting a handful of packets in each customer's bag, and I was sure that most of these condiment packets were just thrown away. I decided that it was time for a new policy, so I informed the employees that they were to ask each customer if they wanted the packets, and then do one of two things. They could specifically ask how many ketchup, mustard or sauce packets were needed, or they could let the customer see them putting a couple in the bag, so the customer could ask for more if desired.

Since everyone who ordered got just what they wanted, I had no complaints from customers. We definitely had fewer packets going out that window. I tracked the results and soon discovered that the new policy was saving the restaurant about $2,000 annually, which meant that the owners had $2,000 more in profits from that one change.

Every business is unique, but as I said at the start of this page, there are almost always some ways to reduce costs. For example, in many businesses you can ask suppliers if there is a way to cut the cost, and some of them might have suggestions that work for you both. Perhaps by delivering bigger quantities but less often a supplier can save money and pass some of those those savings on to you. Or, if you know of other companies that buy the same supplies as you, you might be able to pool your purchases to get bulk discounts.

You can save money on advertising by including some of it with other mailings, like your invoices. You could perhaps put coupons in with your products to encourage repeat business--at a much lower cost than putting them in the local newspaper.

To be more systematic about this, list everything that you spend money on for your business. Even the toilet paper in your public restroom should be included if you have a retail business. Once you have your list, consider each item and brainstorm any possible ways you can spend less for that. Note the workable ideas and act on them or delegate them to employees.

Looking for ways to reduce costs like this is obvious, but how often have you actually made a list and brainstormed ideas? Get started. Those savings you find are profits waiting to be harvested.

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Every Way to Make Money | Find Ways to Reduce Costs