Lesser-Known Ways to Reduce Business Waste
Running a business can be pretty expensive, and the more you spend on keeping your company afloat, the lower your profits will be and the less secure the future of your business will be as a result. We all know this, but what we don’t always know is the best easy to lower our costs so that our business can be more robust.
One of the best ways to do this is by reducing waste. Most of us know we can reduce business waste by switching to cheaper suppliers or running a paper office, but there are many more things, often lesser-known, that you can do to effectively reduce your business waste right now. So, let’s take a look at some of them:
Switch to zero-based budgeting
Zero-based budgeting is one of the best ways to cut waste in your business. It is a method of budgeting whereby every single expenditure for a specific period must be planned for.
Basically, you must look at every single task and process in your business and analyze its value to your business. If it is not absolutely necessary, then it is simply not budgeted for and you must run your business around it.
This might sound like it would make running your business more difficult, but the opposite is actually true. In every financial period, you are able to re-analyze and plan your spending for the whole of that period, so something that may not have been necessary may be a big part of the budget now and something that only cost $1000 last period may cost $5000 this period, so there is a lot of flexibility based in.
How you save money is by not wasting any money on a particular process in a period where it is not needed. Basically, you run an efficient business where every process is funded at zero unless its cost can be justified in any given period. Try it, it really works.
Many business owners think that outsourcing various processes is likely to make their business more wasteful because they will be paying out additional money to a third-party company or freelancer who is not already part of the payroll, but you have to factor in how much that third party’s work will save you in the long term too.
For example, if you were to use a third-party automotive logistics solution to store and deliver your car parts as a vehicle manufacturer, you could save money on the amount of warehouse space you need to buy or rent to run your business, and you can save countless man-hours, and money, in terms of transporting parts and supplies along the supply chain. Third-parties who specialize in logistics are efficient at what they do so they can provide you with all of the services you need for s fraction of the time and resources you would need to use to do the same things yourself.
Another example would be hiring a copywriter to work on your marketing materials. Sure, you or one of your employees could do the work yourself, but that means you would have to take time off from your other duties, and unless you’re a skilled writer with a knack for marketing, that is unlikely to be time well spent. By outsourcing to a competent freelancer, you can save money by saving your own/ your employee’s precious time and you can avoid wasting resources on poor copy that will not convert many sales. You know it makes sense.
Focus on quarterly financial statements
By focusing on your quarterly financial statements, you can very quickly identify areas of spending that are increasing revenue and those that are hemorrhaging money from your business, so you can cut ut the waste and start focusing on the actions your business takes that actually make more money for the company as a whole.
Consolidate your supply chain
If you are using multiple suppliers in the course of running your business,s there is a high chance that you are wasting time and money. More often than not, it is possible to consolidate suppliers and buy more of the materials you need from the same company. By doing this, you can normally access discounts for bull orders that you may not have been able to get when using multiple suppliers, and you can save time and effort by consolidating supply deliveries too.
On paper, it might look like you are getting the best deal by purchasing goods from numerous suppliers, but you can often negotiate a better deal when you are buying more volume from the same company, so ask your supplier if they offer bulk discounts and start consolidating your purchases where possible right now.
Don’t invest in needless tech
These days, you have an app or a software package or a machine for everything. You might think that investing in every single piece of tech you can help you to run a more efficient, waste-free business, but that is not always the case. Some tech packages promise the earth but deliver very little in actual fact. So, before you commit to buying any expensive tech, you should evaluate how much of a saving they will bring your business, in terms of time and money, and if it is less than the cost of the technology, having it installed and maintaining it, then obviously, it would be wasteful to adopt it right now.
In fact, you should be evaluating every aspect of your business, not just the tech side, if you want to save money and reduce waste. Many things we think are saving us time and money are doing anything but which is why they need to be monitored continuously for efficiency.
As you can see, reducing business waste is much more achievable than you might have thought, which is why you should probably think about implementing as many of the above in your business as you can. It never hurts to be a lean, well-oiled machine after all.