With the economy in a difficult place, small business owners may find an alternative route to staying profitable. While marketing and sales may not yield high gains, this could be a great time for business owners to look at finding areas to cut costs. If you run a consulting firm, your main expenses are probably people’s wages and office supplies. In this article, we’re going to give you some concrete ways to save costs for your consulting business, some of which you may not have considered before.
People and hiring
When you’re running a consulting business, you hire smart people who can solve problems. Much of your business is driven by people, not machines or production cycles. Every client’s problem needs a different approach to figure out the best solution. From understanding the client’s situation to presenting a solution, most steps of the process are human-driven. Therefore, it makes sense to first look at how you can reduce your expenditure on people without cutting people loose.
- Hire smart but inexperienced – The more experienced an employee is, the more they demand in pay. So, to save costs, don’t hire those people. Hire people who show enthusiasm, energy, willingness to learn, and common sense. These will often be freshers or interns who are hungry for experience and looking to prove themselves.
- Cross-train employees – Employees with experience in a narrow field do not come cheap. Instead of hiring specialists, consider whether your existing employees can be trained to take care of the same job. For example, instead of hiring a salesperson, can your existing employees be trained to flex their selling muscle? This will keep your business agile, not dependent on a specific person, without compromising on your ability to deliver quality service.
- Rethink part-time and freelance working – The freelancer economy is growing, and you can find freelancers in a bunch of service-oriented fields like graphic design, website development, and accounting. The best part is that they are often much cheaper than hiring a full-time employee and can be hired on a project basis.
- Consider outsourcing – Look at functions in your business that are essential but suck away time that would be more productively utilized elsewhere. A good example of this is accounting. You would rather outsource accounting to a freelancer or even companies based in other countries, who will do it on the cheap. That means you can focus on spending time growing your business, which is a more rewarding use of your time.
- Cap employee spending – Your employees may need to incur expenditure in the course of their work. But without limits and systems in place, there is a tendency to be injudicious with company money. Set guidelines and institute permissible limits for categories of spending, such as client entertainment, travel, meals, etc
Office space costs
COVID-19 has forced a lot of us to rethink a work-from-home system, and many of us are finding that it is more doable than we previously thought. A lot of work in consulting can be done remotely, and there are some savings in the pipeline for it.
- Rethink working from home – By not taking up office space, you save on rent and utility costs, which can be significant. Initiate a work from home policy or rework it to accommodate the weekly team meeting or client meeting. Coworking spaces can be taken up on a flexible basis to fit your needs.
- Optimize resource utilization – If you do have an office, consider cutting down on paper and printing to save money. Swap out appliances and lighting for more energy-efficient options.
- Buy used equipment – Whether it’s furniture or a printer, you can get a lot of things at a huge discount when they have been gently used. Look in your local newspaper or online for businesses that are selling their things. You may find a lot that you can use immediately or after a professional cleaning.
- Cloud storage – Most document storage can be organized through some form of a cloud-based repository. Not only does this save paper, but it also saves you from paying for storage. Not to mention, storing documents digitally minimize the chance that something will go missing.
Many people find finance complicated, so they shove it under the rug. The truth is, looking at your finances in the face and taking the time to understand the terms can save you a lot of money.
- Revisit your bank’s terms – Most banks carry hefty fees, including ATM fees, maintenance charges, and even the cost of emailing paper statements. Look at your bank statement and check the auto-debits. Ask your banker questions to see what can be eliminated. Many banks are open to a discussion since they do not want to lose accounts.
- E-invoicing – By utilizing e-invoicing, you can cut down on costs like postage and print. Sending e-mail invoices to your customer will also help you in keeping better records.
- another thing to look at is the insurance for consulting business. Potentially getting a new quote for your consulting business insurance could save some cost there.
Keeping supplier relationships intact ensures your business functions smoothly. A row with your supplier could stall your business, costing you time and money.
- Negotiate with vendors – Most vendors will be open to negotiation, it’s all part of the business. Some vendors will give you a rebate if you pay immediately rather than take on a long credit period. Other vendors may provide you with a discount if you buy in bulk. Ask your suppliers about what they can do for you.
- Club utilities – Some companies provide bundled services such as, for example, phone service, cable, fax, internet, and web hosting, all rolled into one. Opting for bundled options can save your business hundreds annually.
Whether you are a new or established consulting business, saving money is a great way to recalibrate where you are. When the economy is bad, and business is slow, we can still always ask ourselves how we can use the time to our advantage. Reviewing where we can trim the financial fat is one of those ideas.