By Zev Herman, president of Superior Lighting.
I've always believed that reducing business operating expenses and reducing environmental impact go hand in hand. I have identified a number of effective means of cutting expenses for small- to medium-size businesses that may be beneficial over the course of 2018. Reducing operating expenses can be a year-long, year-round commitment that can ultimately lead to greater profitability. Let's take a look at a few options.
Cutting the Cost of Production
Business owners already know that they should always look for new ways to eliminate the cost of their production methods. However, this initiative can fall by the wayside while you are focused on growth. When you want to reduce operating expenses you can:
- Sell your leftover cardboard and paper or use it internally to create a new product.
- Centralize and consolidate production space. There is such a thing as extraneous or inefficiently used real estate, whether that's offices or warehouse spaces. Once I took a look at something as simple as shelf height in my storage units. It became clear that all of the products for my warehouse came in a certain sized box and that had been true for years. I had my team lower the shelves and discovered I had space for two more shelves.
- Set goals for your optimization initiative. Track the performance and success of them. Figure out what is realistic.
Make Use of Virtual Technologies
Reducing operating expenses means examining every assumption in your business. Sometimes you can replace a process with a more efficient digital practice.
Virtual meetings can minimize travel expenses. That's not just time saved. That's jet fuel, ticket money and so much more. Personal contact is key. In business, you have to be able to shake hands. However, swapping certain trips for digital check-ins can be beneficial and appreciated by both parties.
Explore ways to record your meeting notes with a digital notice. This is often more efficient because not only do you save paper, you can create a central document that multiple people can update and visit at any time. You can even update your people with automated notifications and things like that. For example, everyone on your team can look at one Google Calendar, where anyone can schedule an important meeting around vacation days and other obligations.
Know What You Do Best and Do It
Often, a small business is going to be more profitable with resources if they do what they do really well. An expansion into a field that your people are not comfortable in or familiar with could result in substandard work. Sometimes, you are actually more efficient when you embrace being a big fish in a small pond.
Every business has a different role to play, and there is no shame in that. For example, maybe you have a lifestyle magazine that serves a local community. Many people in that community love your glossy photos of the local scenery and coverage of the various events. However, if you try to expand beyond your own community, you may not find much interest but will have incurred the expenses of printing extra copies or buying more advertising.
Above All Else, Maintain an Opportunistic and Efficient Mindset
Lowering expenses means second-guessing every facet of your business from simple utilities to your large-scale industrial processes. New ways of becoming more efficient are developing constantly. Just because you were using the best method yesterday does not mean it will be the best method tomorrow. Some people view efficiency as a "set it and forget it" dynamic, but unfortunately, that's not the case. The positive side of that reality is that you can enjoy the satisfaction that comes with constant improvement.
Zev Herman is President of Superior Lighting, focused on growing wholesale light bulb and lighting business. Specializes in energy-efficient lighting design and retrofits.