You’re non-stop busy all day on repair after repair, but that doesn’t mean your business is as profitable as it could be. After being in operations for a time, budgets can get out of hand, and costs can start sinking into who knows what.
With COVID-19 making business harder than ever, there’s no better time to reevaluate your finances and make hard decisions. Luckily, in addition to 100% forgivable PPP loan funding, there are also tons of other creative ways your repair business can boost cash.
If you’re looking to drive your profit margins up, then look no further than these simple cost-cutting tips. Ready to hit the reset button on your expenses? Let’s jump in.
5 Ways to Cut Costs for Your Repair Shop
1. Eliminate Non-Essential Spend
When you first started your business, it likely was a lean, mean operating machine—no fluff about it. Over time, you begin building up recurring costs, subscriptions, and other expenses that eat into your bottom line. Look through your monthly transactions and identify which are need-to-haves and which are nice-to-haves. If your business can function without it, consider eliminating it from your spending, or at the very least, putting it on pause.
2. Reduce Overhead
Overhead is typically the most expensive cost month after month. No matter how much business you get, overhead is always going to take a hefty chunk out of your profit margins. However, you can reduce the impact:
- Negotiate rent: Talk to your landlord to see if you can restructure the terms of your lease. Business is hard on everyone right now, and they’ll likely be willing to negotiate some payment plan to keep you as a tenant.
- Talk with your suppliers: See if you can score any discounts or promotions to help lower your COGS (cost of goods sold). Having an ongoing, solid relationship with your suppliers can also pay off. If you’ve developed a long-term partnership, chances are, your supplier will be even more willing to extend net terms or temporarily reduce payments.
- Contact credit card companies: Talk to your lenders to see if they’re able to give you better terms or rates on your credit cards or loans. Lenders can’t afford to have businesses defaulting on their payments, so they’re more likely to be lenient. Banks are also proactively offering relief to their customers, so check your financial institution’s website to see what’s available.
Review your expenses sheet, or wherever you record your transactions, line-by-line. Chances are, there is some way you can lower operational expenditures.
- Marketing – If you haven’t already, you’ll want to understand where your marketing dollars are being spent, and how the investment is (or isn’t) impacting your revenue. Cut anything that’s not contributing to ROI.
- Utilities – Are you monitoring your resource usage? Small things, like investing in programmable thermostats or using power strips to unplug appliances, can help you conserve cash in the long-run. Going green doesn’t just benefit the environment; it’s also better for your bottom line. Need proof? Check out these statistics:
- Services – Do you need the trash picked up every week, or is it possible to switch to every other week? What about cleaning services?
- Software – What software are you paying for? Can you consolidate? Is there a cheaper plan through your provider or another provider?
3. Automate & Outsource
Your business’s most valuable asset is your time. So while it might feel like the DIY route is saving you money, you have to take into account what that’s fully costing you. When you waste time on trivial tasks, you’re losing money. Find ways to automate or outsource your low-dollar managerial functions so that you can prioritize the high-value work.
Anyone (or software for that matter), can take care of creating invoices, backing up files, or tracking stock levels. But as a business owner, you have limited time. Outsourcing these time-intensive administrative tasks allows you to focus on big-picture initiatives, like revamping your marketing strategy or outlining your expansion plan.
Time is money, so spend yours wisely. For more ways your business can save time (and money), take a look at:
4. Take Advantage of Discounted Software and Other Freebies
There are plenty of free software solutions available across the internet—no strings attached:
- G Suite – cloud computing, storage, and collaboration tools
- Toggl – time tracker
- Slack – team communications app
- Google Hangouts – video chat
And to help with COVID-19 small business relief, several tech companies are offering discounts, promotions, and extended trials for their services. While many of these freebies have ended, it doesn’t hurt to reach out directly to these providers as some may be willing to figure out a cost-friendly compromise.
Liquidate your inventory to turn your supply into a money-maker instead of a cash-drainer. Stock loses value over time, and it’s also eating into your overhead with rent for storage space. Selling your inventory at a discount will decrease the return on investment (ROI) of the sale. But it will also save you valuable money that otherwise would be tied up in deadstock, accumulating dust. Get smart and liquidate your stash: sell it in bulk, offer discounts, or provide other promotions.
If money is tight, you may even want to consider selling off your equipment and leasing for the time being. Selling equipment provides you with a much-needed cash boost. When you do repurchase equipment, consider buying second hand — it can save you over 50% of the cost.
Samantha Novick is a senior editor at Funding Circle, specializing in small business financing. She has a bachelor’s degree from the Gallatin School of Individualized Study at New York University. Prior to Funding Circle, Samantha was a community manager at Marcus by Goldman Sachs. Her work has been featured in a number of top small business resource sites and publications.