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When you’re running a small business, money can be tight — and in the current economic climate, many businesses are having to pinch their pennies even more.
The key to keeping your cash flow in check is ensuring that you are spending your money wisely and saving whenever you can. If you are looking to cut costs, but don’t want to sacrifice growth, consider the five tips below.
1. Balance in-house and outsourcing
The first way to keep your business lean revolves around staffing. It can be tempting to hire people for any undesirable or difficult tasks, from marketing to accounting to cleaning services. However, if you're trying to stay lean, challenge yourself to do some of these functions independently. If you need marketing help, turn to some online classes and how-to guides and see if you can learn the skills yourself. For bookkeeping or accounting tasks, consider a software product.
Not only will you gain valuable skills that are important to your business operations, but you'll also remain heavily involved in important aspects of your company. You get to retain control and reduce costs at the same time.
Of course, there might be some tasks you try to learn, and it doesn't work out. You could attempt to run your own digital ads and realize you hate it and find it confusing. In this case, outsourcing can be a solution — but outsource smartly. Avoid hiring a full-time employee and consider taking advantage of the gig economy instead.
In the United States, more than one-third of workers participate in the gig economy. Some of these workers are full-time freelancers doing projects for multiple companies and others have a full-time job and do some gig work on the side. Either way, these workers allow you to hire highly qualified professionals for a limited amount of time. And since you don’t need to hire a full-time employee, you end up saving a lot of money in the long run.
2. Automate
Businesses of all sizes are looking to automate as many tasks as possible. However, for the small business owner who is looking to cut costs, automation is crucial.
Wherever possible, automate tasks to reduce the workload on yourself and others. After all, time is money. If you can automate some business functions, you free up that time to be spent on other valuable business operations that focus more on sales growth.
Some of the most straightforward tasks to automate include:
- Email marketing (email templates, drip campaigns, email calendar)
- Online booking system so customers can book their appointments independently
- A payroll system that connects with your staff scheduling system
3. Focus on organic marketing
In your growing years, you probably won't have a huge marketing budget. If you want to stay lean, consider focusing on organic marketing. Organic marketing efforts can include writing for a company blog, posting on social channels, collecting online reviews from customers, and optimizing your website for Search Engine Optimization (SEO). All of these are organic marketing efforts that can have huge returns.
Many marketers focus on paid marketing efforts, but that doesn't mean that organic marketing can't produce tremendous results. One of the benefits of organic marketing is that the results often stay long-term. In contrast, paid marketing results can disappear as soon as you stop paying. Your PPC ad will stop running when you spend all of your budget. However, if you can get to the top search result, thanks to your SEO efforts, you may stay there for a while. Read up on the current SEO trends so you can make adjustments as needed.
Organic marketing is free, requiring only your time and commitment — perfect for a lean business strategy.
4. Reconsider your space
In 2020, almost every business owner learned how to re-evaluate their business operations. One of the trends that came out of the pandemic is that some businesses aren't necessarily needing store-fronts and offices to operate.
Take a look at your space and ask yourself if you need a commercial space. Is it possible for you to go online?
If the answer is no, consider other alternatives. Co-working spaces can work if you need an office for your employees. It's an affordable solution that also saves you from having to purchase furniture.
Alternatively, if you need a brick-and-mortar location for your customers, consider sharing a space with another business. Not only can this help you cut costs, but the visitors to your partner's company will automatically be exposed to your brand as well.
5. Always keep your customers top of mind
One of the most effective ways to scale cost-effectively is to ensure that you keep your customers’ needs top of mind. Focusing on your clients will help you prioritize specific executions and touchpoints that will be part of their buying journey. From there, you’ll be able to optimize every touchpoint to shorten the overall sales cycle and then navigate ways you can sustain retention.
Here are some key stats that show why putting the customer first will help your business grow:
- 91% of consumers are more likely to make another purchase after a positive customer service experience (Salesforce).
- 66% of consumers expect businesses to know their unique needs and expectations (Salesforce).
- 93% of customers are likely to make repeat purchases with companies that offer excellent customer service (Hubspot).
Keep lean strategies around long-term
As your business gets to a point where it has a healthy cash reserve and no longer "needs" to be lean, that does not mean you have to stop these initiatives. If these lean tactics work for you, stick with them even as your business grows. Any money that you save in day-to-day operations is an opportunity to re-invest in your business.
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