In an ever changing world, businesses do not have to worry about serving their customers alone; they also need to be concerned about the cost and quality of their business infrastructure. Sometimes external circumstances do not make managing the cost of business infrastructure any easier. For example, the impact of a hard Brexit would be felt everywhere and affect businesses in the UK and elsewhere. So, the high cost of business infrastructure is not always fully within business owners’ control. However, failing to take the action necessary to salvage the situation, would be his or her fault. These four options can help you deal with the high costs of business infrastructure.
Analyze your operational costs
How much are you spending on tools (hardware and software included), and the products and services that support your business operations? Do you need them all, or could you do without some of them?
For example, if you have not used a particular machine for some time, but are still paying for its maintenance, you could safely discard this expense. In fact, you could recoup some of its original cost by sell it and investing the money elsewhere.
Check your recurring expenses to review the software that you use. You may find a few packages that you use infrequently or not at all, even though you’re still being charged monthly or yearly subscription fees. In certain cases you will find that software subscription fees are dependent on the number of users, which means you might be paying for all your employees to use the software when only a few of them – or none at all – use the software.
An analysis will help you determine if you should reduce the number of employees for whom you pay subscription fees. This could save your business thousands of dollars per year in expenses.
Another helpful tip: ask for discounts and coupons. I’ve saved money on recurring expenses, like web hosting and content management software, by simply asking for a discount from the service providers. You’ll discover that often they’ll be willing to oblige – as long as you don’t make a habit of it.
business infrastructure cost reduction tip #2 Use cheaper tools and services
“Cheap” doesn’t always mean lower quality, and you don’t always get what you pay for.
Nowadays, the internet allows you to research a product or service thoroughly before making a purchase. If the products, services, or tools you’re using for your business are becoming increasingly pricey, consider cheaper, quality alternatives. Keep in mind that using cheaper tools is subjective and can only be determined by what you’re currently spending on similar tools and/or your budget.
Apart from spending less, you can buy multi-purpose tools to save on your expenses. Some tools, for instance, will allow you to handle content management, social media, web analytics, sales, finance, and others functions from one dashboard. Depending on your needs, it may be more practical to use this kind of tool instead of paying for content management software, sales software, social media tool, and so on, individually.
Business Infrastructure idea #3 Change location
There are several aspects to this option. First, if your current office space is too expensive, you can move to either a smaller office or an office in another area. Ideally, if you run a local business, you should try to stay as close to your current office location as possible. This way you’re more likely to retain your loyal customers. Or, if you’re brave enough or have good reason to, you could move to an entirely new location and start from scratch.
Second, consider that you may not need an office. After close examination, you may discover that remote work is a viable option for you. According to a Gallup report, at least 43 percent of Americans spent some time working remotely in 2016.
If paying for and maintaining your office space is straining your budget, and working from home or anywhere else is practical for the kind of products or services you provide, cut office rent and maintenance costs by going remote.
Increase the prices of your products or services to offset business infrastructure spending
All the options so far have involved cutting costs and trying to save money. But for some businesses it may be impractical to move to a new location or to use cheaper office tools.
So what do you do? You could increase the prices of your goods or services.
There are several options available to you here. You could inform your existing customers of an impending increase in the price of your products or services. Ideally, give them two to three months at current rates which will allow them to decide if they want to continue with your business or find a cheaper alternative.
Additionally, you can choose to reward present customers for their loyalty by keeping the old rates for them, while charging new customers an updated fee. Keep in mind that if you treat your customers well and offer quality products and services, they will tend to absorb a price increase without abandoning your business.
Reducing business infrastructure costs conclusion
In business few rules are set in stone. The way you choose to respond to the rising costs of business infrastructure will be determined by your type of business, your products and services, the budget at your disposal, and cash flowing in. I hope these tips have given you some options that will help you make the right decision.