5 Small Steps To Maximize Startup Profits

Running a business is a challenge. You lose hair, sleep, health, and in this economy, your sanity as well. As a business owner, the last three years have been nothing short of traumatic for me. From evaluating costs to asking for tips from every other business owner, I have done it all.

However, the only thing that has worked for me so far, is cost-cutting techniques.

If you are a business owner currently struggling with finances, here are some tried and tested ways to cut costs and boost profit.

Bargain For Utility

A huge chunk of the overall revenue is spent on utility bills. While most people will tell you there is no way to avoid these bills, I will tell you otherwise. You can easily lower your utility bills if you calculate your overall operational needs the right way.

For instance, I have a team of seven people. While most people will instantly consider that a big team and opt for premium software, tools, and business internet, I opted for free software and residential internet and it works for my team. Currently, I am using Spectrum Internet, as it offers the best speed and reliable connection at a fraction of the price.

So, if you have a team of less than ten people, and are thinking of buying software, tools, or anything else, stick to the free version first. Most of the communication tools offer free versions for small teams, and these tools are ideal for your startup as well. Once you scale, you can simply migrate to the paid plan, as it will be much easier.

Go Smart And Automate

This tip might be controversial for most people because choosing a smart office with automated devices means splurging on everything. However, in the end, you will be saving a lot of money because it is a one-time investment that will help you put basic tasks on automation. Eventually, it will help you boost your productivity, and help you get the maximum revenue.

To give your perspective, my small office has a smart lighting feature, a fully automated thermostat, as well a fingerprint log-in system. While all these things were heavy on the pocket for me at first, over the years this decision has helped me save a lot of money.

With smart sensors, lights and temperature are adjusted based on the presence of employees. In case there are more people present in a certain area, the light is brighter and the temperature is adjusted accordingly. Moreover, through the login system, I get to track the working hours of each employee every day without making them feel intimidated.

Prefer Flexibility In Work

Flexibility at the workplace might seem like a myth, but it can change things for you and your company. So, if you are a business owner obsessed with micromanaging, or making people come to the office every day, you need to forget about cost-cutting.

As a startup owner, I built a team with a high trust factor. Most of my team works from home now. Each member is required to come to the office at least three times a month. Apart from that, there is no requirement to work from anywhere.

Moreover, I recruit specific people for high-priority, part-time tasks. Since experienced individuals demand a higher pay rate, paying them by the hour or hiring them part-time helps me cut overall costs. Temporary, part-time employees are not entitled to health coverage, 401(k), and other employee benefits.

Cut Operational Cost

Operational cost-cutting is one way to help you boost profits right away. Most companies have high revenue, but they end up making very little profit due to high headcount and operational costs. While a lower headcount might not work for every company, you can easily cut operational costs by doing this with your startup.

For operational cost cutting, there is no hard and fast rule. Every business has different needs and different priorities. While working on an operational cost-cutting strategy, it is better to assess your startup and check the overall revenue and operational cost. After considering all these details, evaluate the ratio of operational cost to overall revenue.

In case the ratio is high, get into the details. Calculate a breakdown of your overall cost so you can know where you are spending most of your budget. Then you can evaluate your priorities and decide if there is an expenditure you can minimize.

Collaborate For Marketing

Marketing is a very important part of scaling a business. While most brands spend up to 40% of their profit on marketing, small startups usually struggle with their marketing budget. A simple and easy trick to manage your marketing budget is to collaborate with other startups.

Most startups have limited marketing budgets, so they look for another brand in a similar category and target audience for collaboration. This offers a win-win situation for both brands without making them waste money on marketing.

Simply put, cost-cutting is a very important step toward maximizing profits. While most people focus mainly on boosting sales, they overlook the importance of budget management. With the help of the above-mentioned tips, you can easily boost your profit by minimizing the cost.