If there’s anything that small retail businesses everywhere have in common, it’s the need to control finances. No matter what industry or location you operate in, there are few concerns that rate higher than cutting costs in a small business. Many small companies operate with limited financial resources, yet have to compete with larger corporations for the same market. So cutting costs is imperative to improve profits and grow the business.
On the other hand, you do have to be careful about where and how much you cut costs. Ideally, you want to cut costs without sacrificing product or service quality. For retailers, it also means cutting costs in areas that are not visible to customers. So, reducing salespeople or support staff in the shop may not be a good idea but canceling a service that’s no longer working for you can be.
How to cut costs in small retail businesses
There are many ways to trim the fat, so to speak when it comes to small retailers. Remember that we’re not talking about big things like firing staff or launching a new product. Instead, look at smaller things you can do to avoid spending on items or services that are unnecessary.
Keeping that in mind, here are a few areas you should look at to cut costs in your small business:
1- Consolidate services
Retail organizations – just like your average customer – consume many services. But do you really need them all or can you cut some of them without affecting quality? Most companies do not re-evaluate services periodically but over time, your business needs surely change. Services that were essential may now be unnecessary. Or you may need different services in other areas instead.
The first step is to make a list of all the services your business purchases, especially ones that you pay a subscription for. Now carefully look over the list to see where you can remove, cancel, or modify the services to better fit your current needs. You might be surprised to find services that you pay for but don’t even use anymore!
In other cases, you may find free tools or services that do the job just as well. Many software companies and other service providers offer reduced rates or even free services for small businesses. If you qualify for such discounts, why pay for a corporate license?
2- Outsource processes
While outsourcing has a somewhat tarnished reputation, it can be really beneficial for small retail businesses. For example, a bakery owner may not have the expertise to run payroll or maintain the computers. It makes sense for them to outsource that process to a service provider with the necessary expertise. The same principle applies to other retailers as well. Quite often it is more expensive to attempt to do it yourself (leading to errors down the line) or to hire an employee for the job when you only have a few hours worth of work for them.
Another option to cut costs for a small retailer is to barter for services. If your firm designs websites, offer to create one for the business that does your taxes. Bartering for services can lead to new opportunities or reach wider audiences as well.
You can also look to automate some of the more tedious aspects of business administration. Processes like data entry lend themselves to easy automation and you can save quite a lot this way.
3- Invest in VoIP
It might seem counterintuitive to buy new technology when you are looking to cut costs. But investing in VoIP phone services can save you quite a bit of money. Consider CLC – an organization that switched to VoIP and saved almost 50% on their phone expenses. Their experience is not unusual, especially for smaller retailers. Not only can you save on your phone bills but you will enjoy more sophisticated features than your current service plan.
Many smaller organizations can benefit from features like auto-attendant, mobile apps, digital faxing, etc. But they cannot afford to buy such expensive addons from legacy carriers. VoIP providers, on the other hand, offer them at very affordable prices that will suit your budget.
4- Go green
One area that’s often overlooked when it comes to cutting costs is going green. In other words, think about processes where you can be more friendly to the environment. Offering digital receipts or going paperless can save you money on ink, printer maintenance, and so on. Emailing instead of faxing can also help your endeavors.
You should also look for ways to reduce your energy consumption, thus saving on your utility bills. A smart thermostat can help you regulate the heating and cooling in the store. Install LED bulbs for better efficiency or upgrade an older furnace with a more energy-efficient model. These ideas may sound simple but they can help you manage your budget effectively. Plus it’s good for the environment too!
5- Allow remote working
The current pandemic is practically forcing many people to work from home but consider offering this perk to your employees as well. While a retailer may have limited options to allow telecommuting, there are other alternatives that can help cut costs. For instance, offering flexible hours can help retain otherwise talented employees. You don’t need to fire a hard worker just because they moved far away from the office or have to hire and train someone else.
You can also look into hiring part-time employees or allow shift sharing for those who need it. Or conduct meetings virtually and cut back on the need to travel for your staff. It’s especially useful if you have multiple locations. Measures like these help with employee morale as well as financial responsibility.
6- Shop for services
This is something we do often enough as consumers but many retailers do not implement it when buying services or products. When you’re looking to buy new equipment or considering a new service, always shop around. Get quotes from multiple providers to compare prices and features. Even if you like your current vendor, it never hurts to see what else is available.
In a similar vein, always negotiate pricing. Many vendors will quote prices based on the expectation of having to negotiate. So by simply signing on the dotted line, you’re leaving money on the table. Another option is to buy used products especially those that are not crucial to your product or service quality. Consider buying used printers or other office hardware like desks. You can save quite a bit here.
A common pitfall to avoid is buying in bulk. It may make sense in some cases but many bulk discounts only work if you buy really large quantities. And small retailers are unlikely to use those products before they expire or break down. Always break down the per-unit price and see if your office will use up that quantity before getting those bulk prices.
7- Use your space more effectively
For retail companies, owning or renting office/store space is a non-negotiable necessity. But that doesn’t mean you’re using your space in the most effective manner. Unfortunately, it’s not always easy to cut back on rent or mortgage payments. What if you’re only using 2 rooms out of the 3 you have paid for but you cannot reduce the rent as all the rooms are connected? Do you have room for more displays than what you’re currently using?
Consider renting that space to another vendor for displaying their merchandise. Other businesses in your area may be interested in putting up a pop-up store and pay you for using the space.
Do you have a communal space within your building? You can offer it as a meeting space for small groups or local clubs. You can also host events pertaining to your industry on occasion. This is space you’ve already paid for, so why not use it to generate some extra revenue?
8- Use social media channels for marketing
Marketing and advertising cost money but they seem to have become less effective lately. That’s partly due to the rise of social media sites such as Facebook. So if you still pay money for traditional marketing services, consider redeploying it in other ways. For instance, create and cultivate your social media presence on the same sites your target audience uses. It doesn’t cost you a penny and can generate significant revenue in the form of new customers.
Use word of mouth marketing to grow your business instead of spending on pricey billboards to TV ads. A referral from a satisfied customer goes a lot further in building credibility than random ads. It also doesn’t require you to spend any money on acquiring a new customer. All you have to do is deliver a quality product or service experience to your existing customers!
So, sign up for free VoIPstudio trial to see how your retail company can save costs.
