When inflation and political instability turn world markets upside down during challenging economic times, managers talk about cutting the fat and running a lean operation. In most cases, those terms refer to reducing expenses as much as possible without impacting profit margins. It’s a good trick if you can pull it off. Luckily for business owners, there are several effective ways to achieve good results based on cost-cutting and efficiency.
In addition to upgrading inventory policies, company leaders often pay attention to their finances so they can free up some capital for business use. Additionally, to run a tighter ship, founders and entrepreneurs work to reinforce client loyalty, redo outdated websites, and realign outsourcing strategies. Here’s how to get started paring down expenses and building a more efficient organization.
Rethink Inventory Policies
Inventory management techniques can make a huge difference in profitability. Mismanaging inventory is one of the common pitfalls entrepreneurs should avoid for success. Businesses that hold too much on hand pay the price in excess storage and security expenses. Often, those that don’t have enough inventory at the ready lose customers due to slow delivery and the inability to fulfill orders as they come in. Review your organization’s inventory policy and see whether you need to increase or decrease the average amount of items you store in on-site facilities.
Revamp Personal Finances
Too often, owners forget to scrutinize their finances as closely as necessary. The good news is that entrepreneurs can apply for personal loans and obtain a significant amount of capital for use in their businesses. Personal loans serve a dual purpose in situations like these. First, borrowers can use some of the proceeds to pay off high credit card debt, which is a powerful way of getting spending under control. Then, they put the remaining cash directly into their companies. It’s a win-win scenario for borrowers who operate their organizations.
Reinforce Customer Loyalty
Develop a specific policy about customer retention, particularly for long-term clients. You can even build rewards and discounts into an ordinary CRM (customer relationship management) software tool. Some merchants give discounts and freebies to repeat buyers and an email message thanking them for their continued loyalty. Consumers respond positively to these policies and enjoy being recognized and rewarded for their patronage. Loyalty programs are an efficient way of solidifying a client base.
Review Website Structure
As organizations grow, they must adjust in many ways. From the customers’ viewpoint anyway, one of the most visible changes is website design. As you add more products, services, offices, and payment methods, don’t neglect to attend to website updates. Hire professional help to ensure all new implementations and tweaks are done correctly. Eliminate glitches and strive to make sites more user-friendly with each upgrade.
Revisit Outsourcing Decisions
At least twice per year, review all your outsourcing agreements. Things change, and as your company expands operations, you’ll bring a few previously outsourced functions under the control of your employees. Likewise, larger businesses might need to hire outsiders to deal with complex legal and IT issues. Early in a company’s life cycle, it’s relatively common for owners to outsource tasks like tax preparation, payroll, data security, and billing. Later, company teams take care of those jobs and help the organization save money by doing them in-house.
