2020 was particularly bad for small businesses. In Michigan, More than 11,000 small businesses and non-profits received $100 million in grants and aid through the Michigan Small Business Restart Grant Program. Small businesses were allocated a maximum of $20,000 each to keep them afloat.
While the grants were helpful, the high overhead costs of running a business were highlighted by the pandemic as most businesses could not survive beyond three to four months of lockdowns. Cutting overhead and maximizing profits are now more important than ever, especially since another pandemic may be on the horizon.
Michigan’s electricity prices are going up, and expect more spikes as the local government pushes for more renewable sources of power generation. Power companies forced to adopt green technology will need to spend a lot of money, which will be passed down to consumers. Residential and commercial power rates are all but guaranteed to go up.
One way to insulate your business from power price hikes is by reducing its power consumption or generating its own power. SBA funding services are easily acquired, which you can use for solar panels, and the cost of solar power systems has dropped considerably. Most Michigan businesses consume around 4,000 to 7,000 kWh per month. A 20-kW solar power system can cut power consumption by 40 to 75 percent, which can save your business around $350 to $500 a month.
Savings on your electric bill can easily cover the monthly premiums of a ten-year loan, and your solar panels will give you another 25 to 35 years of reduced electrical costs. In their lifetime (typically, 35 to 45 years), solar panels will save your business $150,000 to $270,000.
Cut Unnecessary Personnel
Take advantage of automation and outsourcing. Automated phone systems and VoIP systems can replace dozens — even hundreds — of phone operators while increasing the efficiency of communication lines. Simple programs can take the place of several HR workers. They can conduct and manage routine tasks such as onboarding, attendance monitoring, payroll, leaves, compensation, and succession planning.
Most companies rarely need software or an IT department. Most companies are better served by just outsourcing instead of maintaining a full staff. Outsourcing tech jobs eliminates the extensive and expensive process of hiring and training staff for specific software environments.
When launching marketing and advertising campaigns in other cities or states, companies are better served by local agencies with knowledge and experience in their communities. Maintaining fully-staffed satellite offices is expensive and wasteful, particularly since marketing campaigns rarely run for more than a few months.
Use Alternative Office Settings
Most companies had employees telecommuting for most of 2020. Working from home proved to be no hindrance to efficiency. Most studies note that working from home or in a shared office space increased efficiency and morale while limiting turnovers.
Running an office is expensive. Rent, utilities, and maintenance costs require significant amounts of money, and another lockdown can flush all that money down the drain. Using shared office spaces allows you to run a skeleton crew in your main office while allocating employees into coworking spaces.
The lack of supervision and office politics works wonders for most employees, especially when output-based models are used. Employees can work through their tasks at their own pace, highlighting the most efficient workers. No higher-ups will pass down work to subordinates and take credit for it, further increasing employee morale. Shared office spaces are also great for contractual employees for location-based projects or specific tasks that require just weeks or months to finish.
Online shopping and digital transactions reached new heights over the past two years. Every major company has its own website and avenues for consumers to transact or communicate with them. Going digital is one of the best ways for a company to expand its business. The Internet will give your business far more reach than opening a few extra branches.
An online shop also won’t have the usual overheads associated with opening a retail branch, such as rent, utilities, personnel salaries. It won’t also have the extensive documentation and permits required to open one. E-commerce platforms like Shopify, 3dcart, Volusion, and Wix allow your company to connect with a global consumer base with minimal investment.
Online shopping is slowly overtaking retail when it comes to non-essential goods. More than 80 percent of US residents have tried their hand at online shopping.
In times of turmoil, companies and businesses need to work harder and smarter. Consider cutting costs where you can, use available technology, and manage your personnel through outsourcing or the use of shared office spaces. This way, you can still manage and run an efficient business.