Many entrepreneurs, when it comes to cost reduction, choose the most obvious option: buy cheaper and lower quality goods, reduce the salaries of employees.
As practice shows, this path is often erroneous and can lead to disastrous consequences.
Why is this seemingly simple way of saving money not good for your business? It’s simple. As soon as the quality of your products ceases to satisfy customers, they will go to the competitors. Employees, due to the reduction of wages, will lose motivation or even begin to look for another place to work. Full rejection of advertising is unlikely to help attract new customers and develop your business. You will learn how to reduce costs in trade and use available resources more effectively from our article.
Tip 1: Optimize your assortment
Don’t waste the store’s selling space on goods that aren’t selling well. Create and analyze sales reports, keep an eye on which products are more in demand.
For example, you sell peach, lavender and lime shower gels. At the same time, peach and lavender are bought regularly, and lime is dusted on the shelves. And there can be dozens of such items. Carefully review your assortment.
Remove from the sale of goods that are not in demand. This will help you order more popular products from suppliers at better prices.
Tip 2. Work with suppliers
Build good relationships with suppliers. Build their trust and become a great customer. You will find that you can negotiate better terms with your suppliers.
For example, some manufacturers may allow you to return unsold goods or set lower prices simply because you are a pleasure to deal with.
Tip 3. Automate your business processes
Think about the business processes you and your employees perform every day. Start looking for solutions that can replace manual work. Spend a lot of time tracking inventory, documenting, ordering and inventory? Start using warehouse management software(https://www.mageworx.com/).
That will help you to save time and reduce costs because time is known to be money. The more time you spend on manual operations, the less time you have to develop your business. Not to mention the fact that when performing daily tasks manually, the probability of an error, which can sometimes be very expensive, is much higher.
Choose a solution that will not only help you to automate routine operations but will also allow you to quickly see the losses and prospects of the selected areas and optimize costs.
Tip 4. Keep your customers
Keeping a client is cheaper than getting a new one. Create a customer base – enter savings discount cards, where customers leave their contact details. Remind your customers about yourself – send SMS or e-mail with special offers, information about ongoing promotions, a new collection, etc. For example, you can monthly sort clients from your base and send congratulations and a discount coupon to those who celebrate their birthday.
Depending on what kind of data you have about the client – gender, age, previous purchases – you will be able to run the most useful and effective mailings.
It is not necessary to spend large amounts of money on advertising and other methods of attracting new customers if you can implement effective strategies to retain existing ones.
Tip 5. Take care of your employees
Invest in the training and loyalty of your employees. Sellers should be familiar with the specifics of your products and set them up to gain additional knowledge. Develop different sales scenarios with them. Motivate your employees through positive reinforcement – praise your success, introduce a system of bonuses for selling additional products. This may seem illogical – additional costs in the economy mode, but the loss and replacement of employees may cost more than their training and rewards.
Please note that you don’t need to spend a lot of money to motivate your employees to work. It is enough to pay attention to them and appreciate the progress.
If you can’t reward your employees for good work now, you can’t offer other benefits — a substantial discount on goods, additional paid vacation days.
Optimize business costs by thinking carefully about the steps and their possible consequences. In the end, you will be able to choose the most appropriate solutions that will help you reduce costs and do no harm to your business. Take advantage of our tips and tricks: Review your product range, build relationships with suppliers and customers, train and praise employees, automate routine operations, improve service quality, save on rent and utilities, and prevent theft.