Keeping costs as low as possible while increasing revenues remains one of the best ways for businesses to stay profitable and sustainable. Business owners are under constant pressure to control costs because they know they risk their businesses going under if they do not. Many are, understandably, reluctant to invest in projects, technologies, and processes they are unsure would align with their need to stay profitable.
However, certain strategic investments can lead to long-term cost savings. The key is finding the ones that would work best for this strategy and your business. In this guide, we will explore notable investments that can help you reduce business costs in the future.
Process automation and technology integrations
Every business that has not fully embraced technology and digitisation likely has repetitive tasks, workflows, and processes. While these processes might work well for your business, they are inefficient and cost you money you could spend elsewhere.
If your employees are using physical accounting records and document storage, they are wasting time and costing the business money. Automation could free them to concentrate on other tasks that have a bigger impact and that can drive revenue and growth.
Workflows such as managing payroll and project management can also benefit from process automation.
The best place to start is exploring the different cloud-based solutions and software-as-a-service models available to businesses similar to yours. There are numerous solutions in both cases for different budgets and businesses of all sizes.
Once you select all the tools and resources you think your business will need, choose an Enterprise Resource Planning (ERP) solution. Businesses use this software to manage daily business activities and processes such as project management, accounting, risk management, planning, and compliance.
These solutions tie business processes together to enable easier management and allow businesses to streamline them for significant time and monetary savings the longer they are used.
Another solution is leveraging artificial intelligence (AI) and machine learning (ML) for process optimisation. Your business likely already collects the data you need to operationalize AI and ML systems that can help you optimise your workflows, systems and processes to make them more efficient and easier to manage.
Fleet management solutions
Businesses that own multiple vehicles understand the challenges associated with managing them using traditional fleet management solutions. In the past, fleet managers would use worksheets, Excel sheets, and other solutions to track driver hours, log driven miles, track fuel usage, and perform other functions related to ensuring their fleets remain productive and perform as expected.
The main downside of these solutions is that their reliance on manual data entry means they were prone to errors that would cascade down the organisation and cause significant problems. Notably, they would cause businesses to over or underpay drivers and miscalculate driven hours, impacting maintenance and putting drivers at risk.
Businesses that invest in fleet management solutions do not deal with issues and additionally see significant benefits. Using GPS trackers as part of fleet management practices means businesses know where all their vehicles are at all times.
This information helps them protect their vehicles from theft and makes recovery much easier if they are stolen. Fleet managers can also see driven miles and how much fuel each vehicle has used. Analysing this and additional data helps them find areas where they can save fuel, such as ensuring their drivers do not drive aggressively.
Using fleet management solutions like a dash cam for fleets has allowed businesses to avoid liability in case of accidents and traffic incidents. They have to report these accidents and incidents to their insurance providers. A higher number of insurance claims leads to higher insurance premiums due to the providers deeming businesses that file too many of them as liabilities.
Another way using a vehicle dash cam reduces business costs is by providing tools for driver training and coaching. By using the footage to help improve driver behaviours, businesses can see reduced accident incidents and reduced costs associated with vehicle maintenance.
A connected 4G dashcam can also help fleet managers identify and address poor driving habits that cost the business money. For example, they can help address behaviours that cause unnecessary vehicle tear and wear like hard acceleration, braking and aggressive driving.
Although a fleet dash cam is not as big of an investment as others on this list, it can still lead to significant savings for businesses that use it for their intended purposes.
Improving the energy efficiency of buildings and facilities
Businesses with large premises, multiple offices, and many employees can incur significant energy costs. These can stem from the properties themselves, the equipment their buildings use, or the equipment their employees need to do their jobs.
To save money on energy bills, businesses can start by upgrading their lighting, HVAC systems, and appliances. There are numerous options in the market with high energy efficiency ratings that they can use for this purpose. In some instances, businesses have reduced their energy costs by up to 30% by investing in energy efficiency.
Many businesses are seeing significant savings by switching to solar power or hybrid power arrangements. While it is true that solar has a high initial cost, those who invest in these systems do not have to pay for power for at least 25 years (the typical rated lifetime of high-quality solar panels and systems).
With enough solar panels and storage solutions, businesses can run all their equipment and fulfil energy needs without relying on the grid.
An alternative is a hybrid solution. Solar energy relies on the sun, and some areas do not receive much of it throughout the year. Some receive enough in the summer and not enough in the winter. A hybrid system that combines solar and grid power is an excellent solution for businesses in these situations.
Even though they cannot expect savings as significant as those of businesses that wholly embrace solar, they can at least halve their energy costs or eliminate them in the summer when there is adequate supply.
Outsourcing
Outsourcing is where one business asks another to handle certain functions. Some commonly outsourced functions include payroll, accounting, and human resource management. Businesses still have to hire an outsourcing company or agency, but the upside is that it does not have to handle any of these functions itself.
Importantly, it does not have to hire the people it may require to handle them. For example, a business may need to hire an accountant and a human resource manager and pay them a combined £50,000 per month. However, outsourcing to an external company might only cost the business £3,000 – £5,000 per month.
Businesses can also outsource their software and hardware needs. Instead of installing on-premises servers, they can leverage managed services bundled with the cloud infrastructure and services or cloud software the business needs. The business never has to worry about hardware maintenance, update, or installation costs because the managed IT services company will handle that.
There are numerous other areas businesses can invest in that could lead to significant savings over the long term. The most important thing is realising what is important for your business and the solutions that are right for you that could lead to savings. Crucially, these solutions should not impact existing processes, workflows, or systems but support and enhance them since this is where your business will realise significant savings.
