How Technology Can Trim Your Small Business’s Operating Costs29th June 2020
Small businesses should always be looking for ways to increase their profits. While the average annual income of a small business owner is $73,000 according to PayScale, profits can go as low as $30,000 or less, depending on how successful their business is. And given that not all small businesses go on to succeeding, it’s important for small businesses to find ways to slowly but steadily increase their income.
One of the ways of doing this is by trimming operating costs so that profit margins increase. Finding areas to cut costs may be difficult for some small businesses, but thanks to some forms of technology, there now exists tech to streamline your business, speed up production, and reduce costs that mean more profit for your business.
In the past, it was common for small businesses to lose out on sales when they overlook a certain product as out of stock or they don’t take note of expiration dates for products like shampoos and conditioners that have gone bad. This results in unfortunate operating losses that the business owner incurs and subtracts from their own profits.
Today, technology has made inventory management much easier. You can determine how much stock you have without wasting your or your employees’ time taking manual inventory as technology can provide real-time stock updating. And when a product has reached a certain low number, tech can automatically order more products for you.
Owning a physical store comes with several unavoidable costs: the rent for the commercial space, utilities, displays for your products, decorations, cleaning tools, the outdoor signages, and everything else that goes into owning a brick-and-mortar store. But by going online, you don’t have to pay for any of these.
Not all small business types are appropriate as an online store, but those that are can take advantage of the lower costs of selling online. Make no mistake: opening an online store is not always free and there are some disadvantages to switching online instead of going physical. And overall, the costs of starting and running an online store is much less, but you get advantages such as a wider target market and a platform where your potential customers don’t have to wait for your business hours to order.
Automate Your Payroll
Did you know that small business owners spend up to five hours per pay period calculating payroll? Automated payroll software, however, can allow you to spend that time focusing on the other essential business operations by calculating your employees’ wages instantly. But, you need to make sure you do your research into these accounting services. Do you know the difference between sage 50 vs sage 200? What other parts of your accounting can you automate with it? Which is the most budget-friendly?
And because payroll is done by computers, you remove the risk of human error in the calculations. According to the American Payroll Association, using payroll software can reduce the process-related expenses by 80 percent. Quality payroll software isn’t free, but think of it as a one-time expense that can pay off when you think about the saved expenses every pay period?
Make Better Business Decisions
Many successful business owners can tell you that they got to their level of success because of their intuition and luck. But for small business owners with a lot to lose if their business fails, this may not be a sound business model they want to base their business on. A smarter decision would be to collect data and base decisions off of it.
Plenty of business tech software can provide real-time reports on sales, marketing, and other data that show where your business’s money is flowing in or out. This can give you detailed reports on the state of your business, what’s working, and what’s eating up your profits. This can help you make strategic decisions based on facts rather than trying to make decisions blindly. For example, if you spend the same amount of resources to make equal amounts of Product A and Product B, if reports tell you that Product A sells out faster than Product B, you could make the decision to spend more resources to make more of Product A and less on Product B.
Taking advantage of the technology available to small businesses today can help you make good business decisions that reduce your operating costs and increase your profits. These methods aren’t free, but it’s up to you to decide if the costs of investing in certain types of technology can pay off in the long run.
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