How to Reduce Business Costs
During these tough times, it’s really important to cut as many expenses as you can from your business. To give you an idea on what you can do in your business, let me tell you what I did with my business – where I ended up saving over $400,000 over the next 12 months.
The first thing I did was look at my business as a whole and start to restructure it and rip out the fat (the luxuries). I started to run it on its bare minimum.
The Internal Accountant
I had an internal accountant on $80,000 a year. I replaced him with an external bookkeeper who I pay $40,000 a year. The accountant was a luxury, so that was a simple swap.
From QA Manager to Installer
I had in my office a QA manager who was on $90,000 a year – that’s a luxury. So I pulled him out and put him back on the tools. That means I was able to remove paying subcontractors – which would normally cost $10,000 a week.
I also had a service tech on $80,000 a year – that’s a luxury. I got rid of him and now the guys have to do services when they’re in the area on top of their normal job.
The next thing were my appointment setters. They ended up costing me $100k a year for their role of booking appointments – that’s a luxury. I now put the appointments back onto their sales reps to book their own appointments. Then later I actually ended up hiring someone full-time on $40k a year.
One thing I was able to do was bring dead leads back to life. I looked at old leads that had gone cold and I sent them a 6-day email chain. By doing that, I started generating around five to ten extra leads from those emails – and for me to go out and get those leads would normally cost around fifty to eighty dollars. So I was able to save – over the course of the year $40,000.
I was paying $80,000 a year in rent for my office (upstairs and downstairs) and $70,000 for a 3PL warehouse. We negotiated an early termination from the office and left the month-by-month warehouse contract. Then I got an office/warehouse property that costs $40,000 a year. So that was a huge game changer.
Overall, that’s about $400k that I’ve brought back into my business. So why am I telling you this? If there’s even a small idea you can take away from this, you could end up saving thousands over the year to keep your business afloat. The way the economy is running right now, you want to be running your business as lean as hell.