How to save on costs for consulting business?
11th Feb 2021
At a stage in your consulting business, you will start to focus on optimization. You’ve got a great long-term strategy, your inbound marketing is sleek, and you close clients at an admirable rate. Your skills are also honed. Now, you look at your business and look for the sinkholes.
For a business to stay sustainable in the long run, you can try maximize revenue and minimize costs. Of course, every business has its costs so there is no such thing as eliminating costs completely. You must be willing to take a good look at what is essential and inessential to the functioning of your business.
In consulting, over half of the budget is devoted to salary. Cutting costs can be a touchy subject. Immediately, we think of tough conversations with staff and practically cringe with dread. However, here are a few tips that may help your consulting business save money:
- Cross-train employees – Hiring specially qualified employees from the marketplace can come at a premium. In addition, they are often confined to a singular role quite early on. Alternatively, focus on developing existing employees to serve multiple roles. This will enable you to make changes if needed (including layoffs) without compromising on your ability to provide services.
- Leverage part-time employees – In most areas, there are people who can only work part-time. Sharing a full-time job between two part-time employees may reduce your salary costs without necessarily reducing the hours worked. Interns fall into this bucket as well. There are so many interns hungry for the chance to work with a company just to get some experience. The best part is they do not come at a high cost.
- 3. Outsource bookkeeping – Bookkeeping is an important part of your business, but it's also tiresome and complicated, taking time away from serving your clients. You can outsource your bookkeeping to a freelancer or even a company in a country like, say, India. A lot of companies abroad work at cheaper rates than you would get in the United States.
Most consulting work, including client meetings, can be done remotely. Here are some ideas to cut your workplace costs:
- Working from coworking spaces – The advent of coworking spaces has made it possible to dispense with expensive real estate rentals. Small teams need not spring for an expensive space that they will never fully use. Coworking spaces also have lots of options for you to hire space for even part of the month at a time.
- Embrace working from home – Working from home in the pandemic has enabled us to review our efficiency. For many people, they are more efficient. Businesses can also save a ton on costs.
Choosing the right technology can save you time and a pretty penny. Inefficient technology does the opposite.
- Get free software – Are you paying for software for which there is a free version? Naturally, do not compromise on efficiency, but there are hundreds of products that will do the job for free. Shop around a bit before expending hundreds of dollars on shiny showy software.
- Cloud storage – Save on all that storage space by migrating your documents to the cloud. Not only is it cheaper than renting physical space, but it also makes it less likely you will misplace an important document.
The price of office supplies like paper, printer cartridges, and other stationery seem minimal at first, but they add up. Not being judicious can lead to money being sucked away from your business.
- Shrink paper use – Going paperless can enable you to reduce your business costs. Switch up your paper invoicing to e-invoicing. Request e-invoices rather than physical. Inculcate in staff a consciousness about printing. Printing is not only wasteful but can lead to a cluttered office, meaning more chances for things to get lost.
- Be conscious about electricity – Electricity bills can turn ridiculous if not watched closely. There is so much that existing businesses can do to slash their bills. Turning off lights, laptop charging points, and using daylight as much as often are just some tips. You can also swap out light bulbs for more energy-efficient options.
You’d be surprised how much potential there is to save money through negotiation with your suppliers.
- Business insurance for consulting firms could be a place to look for cost savings. Talk to your current insurance provider or compare quotes online, you might find policies where you can save some cost on insurance.
- Prompt payment – Most suppliers are willing to give you discounts or rebates if you pay your invoices on time. As long as early payments do not hamper cash flows, speak to your suppliers about whether this is an option.
- Barter – If you can provide a service in return for a product, you can save a ton of cash. Bartering seems like an archaic concept. But people in business are open to discussing the possibility of alternative arrangements if it makes sense for them.
- Buy in bulk – Suppliers often overprice office supplies so try to negotiate a bulk buy from your supplier. Instead of placing an order every month, perhaps you can make an order every few months. Suppliers will give you supplies at a cheaper rate if you buy from them in bulk. Doing this for multiple supplier relationships will definitely add up in savings across the board.
As a business owner, cutting costs must always be weighing on the back of your mind. We hope the tips in this article have given you some ideas of where you can save costs in your consulting business.
All of them may not be suitable to implement at the same time nor will all of them be particularly relevant to your business. Choose the ones that work for you. It costs you virtually nothing but could save you lots. 2021 could be the year of insightful spending and lots of business cost savings.