How to Cut Costs and Boost Profits in 2021

This year has been nothing if not expensive. Lockdowns led to letdowns in revenue figures, while supply costs soared. Companies that made even a meager profit were considered lucky. Keeping a business afloat during a global pandemic is no easy feat. With 2021 on the horizon, it’s time to turn the page on your balance sheet.  You’ve got your work cut out for you. Use these suggestions to find ways to cut costs and make your company more efficient:

1. Join a Group Purchasing Organization

Were you forced to pay more for materials, source new suppliers, or pause production due to shortages this past year? If you handle procurement internally, chances are good that at least one of those situations cost you money. Simplify your supplier operations in 2021 by joining a group purchasing organization like Una. GPOs combine the purchasing power of their members, allowing small businesses to qualify for deep discounts. And because GPOs have backup suppliers, members tend to experience fewer interruptions than when they go it alone. 

2. Embrace Remote Work

If the Covid-19 pandemic taught the world anything, it’s that remote work is not only possible, but easy to implement and cost-effective. Remote arrangements allowed many businesses to maintain their operations while quarantines were in place.  Having your employees work from home saves on a lot of expenses. For starters, you won’t need as large of an office space, cutting costs such as utilities and rent. Certain work perks can be done away with or repurposed, like flexible hours rather than a giant break room with all the fixings. 

3. Automate Everything You Can

Like remote work, automation can reduce labor disruptions. But it can also help you find process efficiencies, spot new audiences to target, and orient your human resources toward higher-value tasks.  Compile a list of tasks you think could be automated. Industry-agnostic ones include candidate outreach, email follow-ups, withholding calculation, customer communication, and social media posting. Then, simply search for tools and apps fitted to those use cases. 

4. Try a Four-Day Workweek

If 2021 is all about innovation, try this trend on for size. Studies suggest that a four-day workweek can significantly increase output. When Microsoft tried the model in its Japan office, it realized a 40% increase in productivity. Why? Because a reduced work week motivates workers to focus on the task at hand, knowing they have less time to get their work done. Plus, closing your doors for an extra day each week further chips away at those operational costs.

5. Change Service Providers

Sometimes all you need to do to cut business expenses is make a little change. Make sure you’re getting the best rates available from your service providers.  If not, first try to negotiate your bills. Most companies would rather retain an existing customer than try to sell a new one. After all, just a 5% increase in customer retention can boost profits by as much as 95%.  If you’re not getting anywhere with a service provider, switch to a cheaper option. When it comes to insurance, internet, banking, and phone service, you can almost always find a lower rate if you look around. 

6. Choose Low-Cost Marketing Channels

The best marketing campaign isn’t necessarily the most expensive one. It doesn’t matter how much money you pour in: An effective campaign is all about getting the right message to the right person at the right time.  These days, “right” is easier and less expensive to achieve online. Social media accounts are free to run and can reach millions. Email marketing, another free option, is simply a matter of maintaining your list and crafting resonant copy. SEO services can help you rank for terms your audience is searching. 

7. Barter With Other Companies

Money isn’t the only way to obtain goods and services from other companies. If you want something from a business that would also appreciate your goods or services, why not make a trade? You might be surprised at just how much you can barter. If you’re a t-shirt shop, you can bet every team in town will eventually come looking for staff apparel. If you’re an accountant, put your feelers out just prior to quarterly tax deadlines. Everything from desk chairs to ad space might be on the menu. 

8. Be Environmentally Conscious

Saving the planet is all well and good, but taking environmentally conscious measures can also help your business to cut costs. Many common business practices waste resources, which usually also wastes money.  Start with easy environmental choices. In 2021, let customers know that you’ll be going paperless. You’ll save not just on paper, but also on ink, envelopes, postage, and labor. Next, lower your thermostat. Dropping the temperature of your office by even a few degrees can save you hundreds of dollars per year, depending on the size and efficiency of your space.  If you want to go the extra mile on environmentalism, there are plenty of other things you can do. Swap out your older company car for a newer, more efficient one — or even an electric bicycle if you’re located in a city. If your waste products can be repurposed, such as fry oil into biodiesel, partner with a recycler.  Saving money should be your top priority for 2021. You can only do so much to change customer demand and market conditions, but you can always cut your expenses. Be smart about where, how, and on what you spend money, and you’ll see: The best is yet to come.