A recent survey showed that 81% of SMEs do not expect their business to grow this year. Some are even predicting a decline in size and revenue. In challenging economic times, it’s more important than ever for SMEs to be savvy about spending their budgets. Thankfully, the digital transformation opens opportunities for SMEs to reduce expenditure without compromising quality in crucial business areas. In this post, we cover five ways SMEs can reduce business costs.
Outsourcing
SMEs are increasingly looking to reduce in-house overheads across key business areas including IT, HR, Health & Safety, Sales and Marketing and Accounts and Payroll. Outsourcing in some or all of these departments can help you reduce resources which, in turn, reduces the physical space you need and employee-related expenditure.
These days, many digital solutions make it easier and more efficient to manage core business processes like those mentioned above. You can outsource entire departments to cloud-based services that operate on a monthly, or annual, subscription basis with costs depending on your business’s size and needs.
Reduce Physical Space
One way that the digital transformation is helping businesses reduce costs is by making flexible and home-working a viable option. Technology easily facilitates mobile and home-working these days. By taking advantage of this, you can significantly reduce costly physical office space.
With recent global events, businesses on mass realise the potential of remote working. Technology facilitates effective communication and collaboration between colleagues, regardless of their physical location. Employees are often happier and more efficient in their jobs because they gain free time by avoiding the stressful commute to and from work.
By permanently supporting remote working, you can reduce your physical premises’ size and save on the running costs associated with this.
Modernize Your Marketing
Are you paying a fortune for advertising? While strategically placed ads can be beneficial for businesses, there are many ways you can get more for your money by modernizing your marketing strategy.
SMEs should have a content marketing strategy these days that utilizes the latest processes and technologies, many of which provide high-impact, low-cost marketing opportunities. Social media platforms offer incredible tools for spreading brand awareness and interacting with customers and prospects. Adequate visual and written content can help you establish your company as an expert and drive more traffic to your website.
By utilizing digital marketing tools effectively, you can reduce the need for traditional sales practices and reach a wider audience much faster. This will reduce costs and broaden your impact, thereby helping to boost your profits in the process.
Reduce Employee Training Costs
Employee training can be a costly aspect of business if left unchecked. While training is vital for an effective workforce, there are ways to allocate training budgets more effectively to reduce costs in this area.
One way of reducing training costs is by leveraging in-house expertise. If people have skills and knowledge in a particular area, utilise this in training other staff members. Making use of online training can also save a lot of money. Free or low-cost training resources are abundant online in the form of courses, instructional videos and webinars. You can also create your own to use time and time again.
Consider taking on apprentices, interns and trainees who can learn on the job at a much lower staffing cost than qualified personnel.
Switch to Cloud Computing
Switching to cloud computing can save SMEs a fortune. Cloud providers offer a range of remote IT solutions that can help you save on in-house IT personnel and expensive hardware and software. Consider using a third-party cloud computing provider for your computing and software applications as well as data access, storage and management.
There are no heavy investments involved with cloud services, and solutions are scalable, so you pay for what you need and can increase this instantly as your business grows.
There are extensive pay-as-you-use business solutions available with cloud providers. You can significantly reduce your infrastructure because they host and manage it for you. This frees you from the hassle and expense of ongoing maintenance and upgrades. These solutions tend to provide greater data security than onsite infrastructure because providers invest in this area heavily since their business depends on it.
Final Thoughts
The digital transformation is encouraging SMEs to switch from CapEx to OpEx spending across multiple business areas. Pay-as-you-use services allow companies to substantially reduce their overheads while only paying for what they need. Audit expenditure across all business areas and consider third-party managed services to replace costly in-house solutions.
Taking action, as outlined in this article will reduce the cost of physical premises, hardware, software, employees and training, freeing time to concentrate on your core business.
