Proper management of costs is fundamental to running any business however it’s important not to over-manage costs.
This can suffocate the business and prevent it from growing. You still need to invest in things such as quality web design and an effective marketing plan, otherwise you’ll never move forward.
As a result, cost cutting and growth are not and should not be mutually exclusive. If done correctly, cost cutting can actually help supercharge your business and your growth.
This happens for a few reasons:
- Reducing costs in some areas allows you to invest more in income-producing areas of the business. For example, cutting back on utilities can reduce overhead and give you more money to spend. A great way to do this is to search for alternative energy companies in your area, or to change your internet service provider to one that provides better value.
- Cutting costs by streamlining systems and processes will increase the amount of volume you can handle. This will help you service more people and make more money.
- Keeping costs down will help make your business more agile. This means you will be better able to respond to changes in the market, whether they be good or bad.
This process of cutting costs while boosting profits is often referred to as optimization, and it’s a smart thing to do. It will not only help you boost revenue, but it will also give you a better handle on your cash flow situation, the importance of which cannot be understated. The majority of businesses fail because of improper cash flow management.
To help make sure your business continues to thrive, here are five ways your digital business can optimize:
If you haven’t figured it out already, then know that inventory is going to wind up being one of your biggest expenses. It’s a constant balance between making sure you have the items your customers want in stock without spending a bunch of money on things that just sit on your shelves.
A good solution for digital businesses is to simply not bother managing your inventory. In other words, you should make use of dropshipping. This is the practice of turning your inventory over to someone else so that they can manage it. All you need to do is process orders, and that’s pretty much it.
One of the best dropshipping service out there is Fulfillment By Amazon. For a small fee, you can take advantage of the massive logistics operation behind Amazon to quickly and easily deliver your products to your customers without having to worry about the headache and expense of managing your own inventory.
Another thing to do is to implement automated solutions wherever you can. Good places to do this are in some of the backend functions of your business, such as payroll and accounting. It can also work in areas such as marketing and customer service.
More specifically, you could invest in a CRM platform as well as chatbots. CRMs will help you track the activity of your customers so that you can target them more effectively and better address their needs. Chatbots will allow you to both quickly address people’s issues and also collect information about common problems your customers are experiencing.
Switching over to these services requires an initial investment, but they are worth it. The boost in efficiency and productivity they can provide can potentially be hugely valuable to your business and perhaps more importantly, they can be easily scaled. This means that as your business grows, you do not need to worry about your operating costs ballooning at the same time. You may need to upgrade your plan, but this will come at a fraction of the cost of doing this stuff on your own.
When you can’t automate something, then find some help. While we’re often tempted to go out and hire people, as this makes it feel like the business is really growing, you should avoid doing this until the last possible moment because recruiting and hiring people is expensive.
Outsourcing is not only a way to save money, it also allows you to enlist the services of industry professionals at a fraction of the cost. For example, you might not be able to hire on a social media marketing expert full-time, but you can afford to bring them in for a three month campaign. This type of arrangement is much cheaper for you, and it also helps push your business forward.
Become an Analytics Expert
Much of the success of your business will come from your ability to understand what’s working and what’s not. You need to be able to identify areas of growth, as well as areas where thing’s just simply aren’t going your way. One of the best ways to do this is to know your way around Google Analytics as well as any other website tracking program you might use.
These services keep a lot of data about your site, and it can all be very useful for helping the company but you need to know what you’re looking at. This is much easier said than done and while you can hire someone to help you, this is going to cause costs to skyrocket.
As a result, you should really spend some time getting proficient with these resources. Watch YouTube videos, or look for a course on Lynda or Coursera. This will allow you to get the most out of the data you collect without having to worry about spending money on hiring someone or enlisting the services of a consultant.
Lastly, a great way to grow your business without incurring a lot of new expenses is to make use of affiliate marketing. Affiliate marketing opens your business up to new audiences without you having to spend much or perhaps any money. You offer a commission to people for achieving something, such as generating a lead or making a sale, but you only need to pay when they produce results.
There is very little risk in using affiliate marketing, but there is potentially quite a big reward. There will be a time commitment in the beginning as you seek out affiliate partners, but once you have a good core in place, you can just sit back and watch as your affiliate network does its thing.
Start Optimizing Today
Optimization needs to be built into all that you do. If it’s not, then there’s no better time to start than now. Begin by implementing the strategies discussed here, but don’t stop there. Keep a critical eye on your business, and you will soon see new growth opportunities and opportunities to optimize in nearly everything you do.
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- 5 Ways Digital Business Owners Can Cut Their Costs And Boost Their Profits - February 8, 2019