From expensive office rent, tech and tools for the staff to marketing campaigns, just like any company, agencies have to deal with growing expenses to build a successful business.
But if your budget is consistently in the red, you can try making smaller changes before resorting to desperate measures like cutting staff and resources. Since in an uncertain economy, even the slightest increase in revenue or reduction in expenses can create a positive change in the profitability of your company, here are a few ideas on how you can cut costs in your agency.
Review The Tools You Are Using
It is no secret that many organisations tend to use many computer programs and different apps these days, especially paid ones, that can represent a significant portion of the business's expenses. Thus, it may be a great idea to review all of your software subscriptions or maybe even membership and club dues or industry publication subscriptions and identify the ones that just don't apply anymore. For example, instead of using billing software, consider writing invoices manually for a while.
Trade Your Monthly Subscriptions For Free Ones
Many business owners also love to work with the latest and greatest tools such as content management platforms, account and proposal software, etc. Sure, most subscription-based tools offer better customer service and brand awareness or a more user-friendly interface, while some subscriptions are simply obligatory for your agency. However, with a large number of free or very minimal cost tools available online, you can find suitable alternatives to most business programs, tools and the various apps that you usually use at higher prices.
Start by taking inventory, noting the company's monthly or yearly expenses or even per-user costs. Then do a little digging to identify if there is a new or competing tool that is willing to provide its services at a better price and can replace those expensive subscriptions. Also, make sure to task someone or assign a small team to do a test run of the most cost-effective marketing and business tools out there and report back with a comparison report. You don't need to replace every tool - begin by replacing one and see how it goes, then try another one.
Make The Most Out Of Your Office
If you are to look at your monthly financial statements, renting a big office space probably accounts for most of your company's expenses. However, having too many supplies, piles of paper folders, overflowing storage facilities and inefficient placement of furniture and equipment - are all common space wasters. Thus, it might be time to analyse the usage of your current physical space and find ways to make the most out of your office.
Consider consolidating or centralising the various functions or departments of your agency and using space for dual purposes. For example, a conference room can be used as a break room or a storage room that will hold copiers and fax machines.
Also, while many companies practice updating equipment every couple of years, no matter how relevant it is, consider purchasing used and/or manufacturer-refurbished equipment. Or if you have old equipment laying around - sell it! Any assets you might have but don't need anymore can be useful to others.
Or More Working From Home
The coronavirus outbreak kept most of us inside of our homes during the lockdown. This has thrust many businesses into remote working instead of the traditional office-based environment. Many companies soon realised that working from home has its advantages, as agents could still carry out their job tasks.
As we all return outside, most businesses reopened and brought some team members back to the office. However, continuing to work remotely can lead to reduced overheads since most employees can work from home, and an office presence is not always required.
Having fewer office workers and letting your staff work remotely as much as possible means that you spend less money on office space and office equipment while sustaining the same level of efficiency. To reduce your company's costs, you can even consider sharing your workspace and renting it with others or going fully remote.
Consider Local Partnerships
It may seem obvious, but a partnership with other local businesses is a beneficial tactic, especially since you will be hyper-targeted to your local market. Make sure to look for nearby companies - any type of business that has something in common with your agency or has services that complement yours. For instance, in case you run an estate agency, you can partner with lawyers, while a marketing agency can work with a financial services business.
By partnering with other local businesses, you can refer their services to your customers, create a joint package of offerings with special prices or provide discounts to people who come to you through one of these companies. You can also generate content that both teams will publish and share. For instance, making podcasts and webinars can help to market your services and raise awareness of both of your companies. Plus, it is a great idea to maintain these partnerships by driving traffic to their services from your social media accounts and website, promoting them at events and actively working to attract valuable business referrals - and your partners can do the same for you. Either way, this is a win-win scenario!
Combat Cash Flow Issues
Are you facing cash flow uncertainty and borrowing money while you simply wait for your clients to pay? If so, then you are probably paying excess interest, making it essential to find ways to get this money faster.
At times when your agency growth is constrained by slow payment of invoices, you can use different business funding options, retainers or deposits. To keep cash flowing as forecasted, you can also incentivise your clients by offering early payment discounts on invoices. This will help cut your unnecessary interest expenses and improve your overall bottom line.
Ditch Marketing Channels That Aren't Working
Chances are, you have many different channels: social media, blog, PPC, email and influencer marketing. However, some channels might perform better than others. So why not cut those ones that are not meeting your short and long term goals or simply underperforming?
If you are unsure what marketing channels you can cut, take a look at your competitors and identify what channels they use the most. These are probably the most profitable ones.
Or start scaling back channels depending on your short and long-term strategies. Since content marketing and SEO efforts are long games, you can pause or shrink them while you invest additional resources in paid advertising and social media. As leads and sales grow, start bringing them back into your bigger strategy.
