After six years of uninterrupted growth, the American economy changed course in the first quarter of 2020. Even prior to the economic disruption, businesses had to balance the need to invest for growth with profitability. The new economic realities change the focus from cost containment to cost reduction for many companies. The question is, what to cut without rendering damage to the organization.
Identifying the right cost reduction measures takes careful consideration. Thankfully, today’s technology provides small and medium-sized businesses (SMBs) with some opportunities to cut costs without sacrificing sales.
Here are five ideas you can implement now to strengthen your budget.
1. Outsourcing IT
There is a natural desire to keep everything in-house. It seems cost-effective, it “feels” more secure, and it’s the way you’ve always done it. When you review the costs, you are likely to find that isn’t the case.
Technology becomes outdated rapidly. The investment you make today is unlikely to deliver return before it is necessary to upgrade. You’ll invest budget, time, and productivity trying to find the right IT solution for your SMB. Managed Service Providers (MSPs) work with multiple companies and are experts in IT. Their business is based on providing the best technology for organizations to thrive.
Another significant benefit of working with an MSP is the ability to scale up and down depending on your business. If something changes and you need more support to open a new office, your MSP can quickly deliver resources for that project. You aren’t locked into big capital expenses or direct hiring expenses.
2. Process improvements
Many companies get bogged down with the concept of “that’s how we’ve always done it.” Don’t fall into this trap. You should always be on the lookout for ways to streamline your processes. Otherwise, you’ll hire more staff than you need, and productivity will suffer. It can be challenging to see where to optimize your operations. Working with a trusted advisor brings the benefit of an independent view of your approach and methodologies.
3. Automating with Software as a Service
Automation goes hand-in-hand with outsourcing IT and process improvements. Historically, businesses would purchase software and manage their installation across individual computers. It takes an admin to maintain and keep all the instances updated. SaaS changes this approach with the software hosted on the provider’s servers. Updates are made by the provider and then pushed out to users. The model makes it much easier for businesses to stay current with the latest versions.
Additionally, traditional on-premise software installation generally requires large upfront purchases. You base the purchase on the number of users you expect to support with the software, and that’s it. If you need to add users, you need to buy more software. There is no going back.
SaaS is typically a subscription-based service. You can scale up or down based on the subscription level. The SaaS providers generally offer free online training to make sure users can get the most out of the software. It is hosted on the provider’s servers, which means there isn’t a required hardware server purchase. You just need to maintain an internet connection.
4. Travel costs
The first half of the year has shown that many in-person business meetings can be effective with video conferencing. There are significant costs associated with travel to customer sites. In addition to the fees for airlines and mileage, a one-hour meeting can consume the entire day for the team attending. Video conferencing enables the group to meet whenever it is convenient, regardless of the attendees’ physical location. There are a number of enterprise-quality video conferencing applications that provide an outstanding visual experience and security.
Security might not come to mind when you consider cost reduction tips. Unfortunately, with cybercrime continuing to grow, your business can’t ignore the risk. If your company is hit with ransomware, it could end up costing hundreds of thousands to recover. There can be fees involved if customer data is stolen and potential government fines. One approach to save costs is to hire a company to manage your cybersecurity. It can be bundled into your MSP contract to deliver significant cost efficiencies.
Want to learn more about cost reduction techniques for your company? Talk with our consultants at BlackPoint IT Services. We can provide a free IT assessment to show you how to improve your IT services and increase efficiencies.