How to keep costs down and rebuild in 2021

By Citizens Staff

2021 is anticipated to be a dynamic year full of possibilities for businesses to seize opportunities as the pandemic comes under control. A central question for many companies, though, is how to keep costs down while pursuing business objectives.

Review the following tips for managing costs while you position your company to thrive this year.

Get multiple quotes

Standard business advice is to seek at least three quotes for the products and services on which you spend money. But, in the daily rush of running a company, some businesses fail to do this. While this is understandable, it’s not advisable. The effort you put forward during the purchase process can deliver significant savings over time. It’s particularly important when you’re committing to a repeat or multi-year purchase. Consider the savings of even a few thousand dollars multiplied over months or years. Of course, always weigh quality and value when you’re evaluating price.

Preserve cash

Even if you have already cut some expenses, revisit all your cash outlays to determine how else you can reduce spending. Most businesses can benefit from this undertaking: according to the MetLife and U.S. Chamber of Commerce Special Report on Coronavirus and Small Business, only 59% of businesses feel comfortable with their current cash flow. Review everything from rent and equipment leases to insurance, office supplies, software, consultant services, and memberships in professional associations. If you have any assets that aren’t being used, and you don’t foresee needing them in the future, you may want to sell them. Other options for cutting expenses may include closing locations or revisiting your financing terms for loans or leases. Before you renegotiate leases, sell assets, or make any other adjustments, consult with your tax or business advisor to be sure you understand all the tax and financial implications.

Digitize everything

Using technology to drive efficiency in all aspects of your company can result in cash savings that may be important to your 2021 success. Jack Murphy, President of Citizens Business Banking, encourages companies to look for ways to continue to digitize to best position themselves this year. Businesses can digitize everything from recruiting to social media marketing and payments. While you may need to invest in technology to support this effort, that doesn’t mean you won’t be saving money. Jim McGlashon, Virtual Relationship Manager at Citizens, emphasizes the importance of conducting a comprehensive calculation of the costs and savings of a business shift to really see the potential benefit. He uses the example of a company that is considering accepting credit cards as a payment option worrying about the associated fees. McGlashon points out that fees are typically offset by the benefit of collecting money more quickly from customers than with other forms of payment.

Reduce staffing costs

A study from the Society of Human Resource Management (SHRM) finds that close to 25% of U.S. companies are using a four-day workweek, and another 30% are considering it. This move can provide needed financial savings this year, and SHRM’s study says it can also boost employee satisfaction. Other ways to streamline this big expense category is to automate the management of payroll and other human resources tasks.

Help your customers spend with you

Along with cutting your cash outflow, it’s important to boost cash inflow as much as possible. To support customers spending with your business, consider providing them many options for buying with you, and even including a way to finance what they need. When you offer financing for monthly payments or one-time investments, you support customers’ needs and drive sales for your company. Also, offer as many payment options as you possibly can so that people can easily spend with you. These include contactless debit or credit cards, mobile solutions like Google Pay® and Apple Pay®, or peer-to-peer (P2P) services such as PayPal®, Venmo™, or Zelle®.