5 Cost-Cutting Tips That Every Leader Needs to Know

We all want to save money and spend less while generating more income when it comes to our business. This is doubly true if your company is looking to expand in the near future – you’ll need significant capital if you want to open a second location, market a new product or anticipate future economic downturns. But it’s also important if you’re looking to cut costs after a particularly hard year for the entire market.

No matter what you need, here’s a list of five cost-cutting tips that every B2B leader should know when it comes to financial management.

1.  Review your expenses — often

Successfully managing your finances is impossible if you don’t track your expenses. Whether it’s through a spreadsheet or budgeting software, you should know how much you’re putting out and taking in on a consistent basis. Good accounting software can help you review your costs, account for taxes and adjust your management habits.

It’s important to be aware of where your money is going. It’s tough to look at an end-of-year report and see that you’ve spent thousands of dollars ordering out lunch for the team or running up the company credit card.

This isn’t to say that your team shouldn’t be rewarded for their hard work, but you should be aware of what you’re spending money on and if it’s helping invest back into your business.

Consider making cost-saving investments such as co-working spaces to lower overhead and utility, particularly if many of your workers are going to shift to remote work part of the time in the wake of the coronavirus pandemic.

2.  Negotiate all your contracts

It’s also a good idea to negotiate all of your contracts, both with your vendors and your shipping companies.

In fact, it’s a good idea to reconsider your vendor contracts at least once per year. This allows you to take anything that has changed into an account and determine where you can cut business expenses most efficiently.

You should negotiate vendor contracts for everything that your company uses, from food services to vending services to product manufacturing services and more.

Whenever you need a new vendor, you should try to solicit bids from three different vendors to make sure that there’s enough competition to net your organization an excellent price.

When choosing vendors, remember that value is more important than raw cost. If a contract costs more, but that vendor provides more direct value to your company, they might still be worthwhile and lead to long-term savings on the road.

Shipping company negotiation follows a similar idea. Never assume that your current shipping companies are giving you the best bang for your buck. Many smaller shipping companies may have more wiggle room than you imagine, and many larger companies may be able to work with you as you purchase bulk items for cheaper contracts.

The bottom line is that you should review all of your shipping and vendor contracts so your company always benefits from the best vendor relationships possible.

3.  Consolidate your purchasing

Want to cut down on costs and streamline your procurement and shipping processes? Any large business needs an airtight supply chain, and you can do wonders for your supply chain and your bottom line by consolidating your purchasing.

Consolidation of purchasing involves buying supplies and materials in bulk, especially when those materials will be used by multiple departments within your organization.

You can do this in a few key ways, such as by leveraging associate memberships. These often allow you to negotiate purchases for bulk amounts of product or supplies. You can also offer companywide subscriptions to certain publications or the best VPN for torrenting or software organizations, depending on what exactly you need.

Regardless, by consolidating your supply purchasing, you’ll save money as each department won’t spend money buying the same thing over and over for higher prices. To that end, you should look into creating or leveraging an existing procurement department for this purpose alone.

Furthermore, using fewer vendors means you’ll be able to negotiate better prices and significantly improve your company’s cash flow. There are literally no downsides to this strategy.

4.  Outsource your non-essential tasks

This is a big one. When it comes to B2B marketing, copywriting, customer value management, lead generation and social media management, don’t be afraid to reach out to a freelancer.

Not only will you be cutting the cost of having an employee in-house, but you can also negotiate how much you pay for these services. On websites like Upwork and Fiverr, you can find thousands of freelancers that specialize in the services you need without footing the bill for a benefits package or overtime.

Although these tasks may seem nonessential, they can end up making a lot of money for your business, and you may be able to get a $1000 service for only a couple hundred dollars.

5. Invest in a reliable accountant

The initial cost of an accountant may have a large price tag, but remember that money saved is money earned. Accountants can handle everything from weekly and monthly reports to complicated tax requirements your business will need.

Having a trustworthy accountant allows you the freedom to know what your money is doing on a day-to-day basis. This is one expense that you shouldn’t cut corners on, because long term it’s going to cut your costs every single time.

Final thoughts

The bottom line is that if you’re looking to cut costs, look at what’s right in front of you. Be aware of your spending so you can be sure you’re making the best financial decisions for your business long term and short term.

Always look for ways to be more flexible, as flexibility allows you to feel more comfortable cutting costs for the greater good of your business.