Building a business is hard. The first few years can mean the difference between success and failure, but even after those initial years, keeping a business growing and thriving is a major challenge.
One of the bigger concerns for most business owners is the cost vs. gain ratio and ensuring that your profit margin is large enough to allow for investment. Those additional investments are what can secure future growth and success. A good business owner doesn’t think only in short term goals. Instead, he/she considers how to ensure the business is thriving five years from now. A healthy profit margin that allows for new investments and developments is crucial for making that happen.
One way to increase your profit margin is to cut costs. By “trimming the fat” or cutting down on unnecessary expenditures, you can save a little more of your budget and use that money in other ways that are beneficial to your business
While that seems like a tall order, you’d be amazed how often businesses funnel money into unnecessary or wasteful purchases that don’t really help the business at all. Below are some key spending areas for every business. Take a look at how your business is channeling money into these areas, and you might be surprised where you can save a few dollars—and where you can save a lot.
Acquiring the Customer – One of the primary costs for every business is getting the customers in the door (or to the web page). It can be expensive if you go traditional, general means to advertise and get your business’s name out there, but there are so many other ways to make yourself known. The best way: word of mouth. And how do you make that happen? Find the right people and infiltrate. Most of this can be done through online social networking, or by attending markets or other events that draw crowds. Make an impression and you will find people returning. You know your business better than anyone else, so take some time to look into how you’re attempting to draw customers in, how your business is presenting itself to the larger world, and consider some new and more creative ways to make that happen. There’s a whole online world of free and easy interaction waiting for you. Make yourself known.
Branding and Marketing – Some companies think that hiring a marketing firm to design and market a brand or image is the best way to go. And for larger companies, maybe that’s easier. But your business probably isn’t some conglomerate with extra cash to spend on advertising execs. You can do this on your own. Take a look at the soul of your business and consider your customer base and the image you want to present. I have a good friend who is just starting up her business right now, but she’s been talking to people for months about it. It’s a yarn shop. I mean, nothing special, right? But she has made it special. She has a logo and a quirky, bright environment, as well as classes planned and all of this has been cycling through certain communities and groups for months. Her business has personality and image, and she’s figured out exactly who to target and the exact area of town she needs to stick to in order to keep her business growing. It’s brilliant. You can do this too. Give your business an image, an association, and then find the right people and get them excited about what you have to offer. Conversation costs nothing and you will save money by simply talking, through social media or open conversation.
Employee Training and Development – The right employees are crucial to a successful business, and one major investment, either in time or money, is training new employees. One sound piece of advice here is to make sure you hire someone who is not only self-driven, but already has certain skills. I don’t mean that this person should be able to do your job on day 1. But, he or she will need to have the basic set of skills to work within your business without having to be coddled. It stinks to say it, but you aren’t in business to be a humanitarian to the unskilled professional world. And you’re certainly not able to carry dead weight. There are hundreds of free courses for basic skills, so a person has no excuse for being incapable of running a computer these days. Beyond that, the right employees should be able to pick up skills quickly. If it’s a complicated task, make sure they have prior experience. If they don’t but you have a gut feeling this person is the right one, just make sure you and the employee are aware of a trial period and that there are certain expectations. Don’t get stuck with someone who presents a good face and then ends up being a dud. You will end up paying more in the long run, instead of finding an employee who will help you grow your business and who will draw in the right customers.
Cutting costs for a growing business is truly a matter of knowing your business. The areas above are the 3 major areas of spending for most businesses, but every business is unique and it’s hard to give truly correct general advice. Look into your business and open your mind. Look online and look for ways to connect with others.
That friend of mine who is opening the yarn shop, she is a part of a social group of bicyclists and every single individual in that group will be supporting her business by word of mouth or by direct participation/purchasing. Find that niche or social group that will make your business strong, either online or through direct interaction. It’s a free, fun, and easy way to make your business grow and thrive, and you’ll save money in the long run because the right people will be surrounding you and bringing in others who will support your cause.
About the Author – Ashley Choate is a native of Jacksonville, FL where she lives with her son, dog, and three cats. She graduated Magna Cum Laude from Jacksonville University with a BA in English and holds an MAED in Adult Education and Training. She lives for reading and writing, learning and teaching, and figuring out the day-to-day traumas and joys of mommyhood.
Top Photo Courtesy of Becky Stern @ Flickr CC.