Irrespective of the net worth of a business any poignant and respectable marketer knows how to save a penny wherever possible. With the increasing size of a business it may become difficult to monitor each and every penny spent, however detailed budgeting plus a few cost cutting techniques can help you save hundreds of thousands of dollars each year.
So here are a few interesting and very effective techniques to make your operating margins inflate without touching your pricing mix.
1. Make sure your vendors know about each other
It is not necessary to formally introduce them or make them bid for their services, but it has always been seen before that the feeling of competition always brings out the best possible prices from the vendors. Even if you are planning on riding along with your current vendor, getting them to know their possible competition will keep them alert and their prices grounded.
Reviewing them annually or semiannually is also another prudent idea to make sure that all your vendors are keeping to a standard price range. Flag all the automatically renewing contracts since the practice may draw in complacency from the vendor’s side.
2. Train your staff to haggle
It may sound trivial and maybe even a tad tacky, but this is an extremely effective tactic. Haggling has been shown to fetch each penny’s worth. Short negotiations can garner additional discounts from your vendors which may not have been accounted for and this can reduce all your variable expenses by even 5-10%. Your staff and team members may even be encouraged to negotiate with vendors in return of small incentives based on how much discount they can obtain.
3. Avoid buying in bulk
Most people have the preconceived notion that buying in bulk fetches attractive discounts; well that is true if you are shopping in Costco (unless you are only one person, why does one person need a gallon of mayonnaise?) or Wal-Mart. For most small business which have experienced a recent boom, not reviewing vendor prices is a big mistake.
In such cases, these companies end up paying the same rate for the same products they were earlier buying in small quantities and as a result they end up spending inflated sums. It is much smarter to buy only the quantity your need and to review the vendor prices before making a big commitment.
4. The art of cloud sourcing
A very common problem faced by all young businessmen is the hiring and training employees for their business and the insurance cost of their employees. A smart solution to all these problems include cloud sourcing. While it costs about 4,000 USD to go through the aforementioned process, cloud sourcing comes with zero initial cost.
The process involves hiring people online who can work remotely for a fraction of the original cost. Plus you do not have to worry about vacation time, sick leave, insurance costs, etc. Most of these individual workers can be used for account management, content detailing, marketing, business administration, and also technological management.
5. Shop around for insurance
While looking for insurance to cover your business, you should not settle on the first plan which seems to suit your needs. A wonderful practice is to compare and contrast all possible insurance policies within your budget from all the leading insurance companies. Better still, find some independent agents or an insurance hunter who are not financially dependent on any particular company. They can either provide you with the best possible rate or hook you up with a company where you can customize a policy according to your needs.