Operational costs or expenses (OPEX) are the expenses incurred by a business for its daily operations. These costs can differ from business to business, but the most common ones include payroll, rent, equipment, utility, inventory, insurance, and marketing.
Operating costs are unavoidable as your business operates daily. Some businesses work to reduce these costs so that they can increase their earnings. However, you should be careful when doing this. Most of the time, when you reduce your OPEX, you may also be sacrificing customer experience and the quality of your products and services.
Are there ways to reduce your operational costs without sacrificing your products and services? The great news is, yes there are ways to decrease your operational costs without lowering your standards.
From installing commercial solar power systems to making your building more energy-efficient, here are some ways to reduce your operational costs.
1. Invest in a commercial solar power system.
Utility costs such as electricity are perpetually rising. The costs of solar power systems are decreasing over the years as the technology becomes more accessible. Residential owners are not the only ones who are taking advantage of the trend to significantly reduce their electricity bills. Small business owners are also starting to take notice of this sustainable energy alternative. In fact, big names have already invested in commercial solar, including Amazon, IKEA, Apple, Walmart, and Target.
Installing a solar power system for your small business may seem like a costly investment at first. However, with savings in the long run, it is a worthy investment that you can make for your business. Solar power can help you significantly reduce your energy costs by making you less dependent on the energy supplied by the grid and reducing your electricity bills.
You also become sustainable and depending on the capacity of your solar power system, you may continue operations in case of blackouts. You can also enjoy tax credits upon the installation of your solar power system.
By using renewable energy and reducing your consumption of non-renewable energy, you are building your brand image as an eco-friendly and responsible business organization.
2. Take advantage of social media advertising.
Most people are going online. In fact, there are more than 2.7 billion active Facebook users. With social media and the internet, advertising does not to be as expensive as before. Create a website and social media presence and reach out to millions of your target customers. You can also take advantage of email marketing, which is effective yet cheaper compared to traditional advertising. You can send discounts and freebie vouchers through emails without needing to print them. It is cost-efficient and more eco-friendly than the printed alternative.
3. Lower office costs.
With the rise of remote work setups, more and more businesses are turning to this option instead of running an actual office. This will depend on the business that you are running of course. Some tasks, such as bookkeeping, payroll, and online marketing, can be done remotely, reducing the need for more space in your establishment. You can also save on utilities when you have a remote setup. Having a work-from-home setup also allows your business to be more resilient.
4. Convert your establishment into an energy-efficient building.
Converting your business establishment into an energy-efficient structure is one way to lower your operational costs. Here are some steps that you can take so that you don’t suffer from energy wastage and higher electricity bills.
- Use energy-efficient lighting. Switch those incandescent lighting for LED or CFL, which uses less energy and lasts longer.
- Turn off lights that are not in use.
- Use a programmable or smart thermostat.
- Install energy-efficient windows to stop cooled or warmed air from escaping.
- Take advantage of sunlight and turn off artificial lighting if you have windows facing the sun.
- Shut down computers when not in use.
- Maintain your HVAC regularly to keep them efficient and working smoothly.
5. Save water.
While it may not be much, saving on your water bill can still reduce your operational costs. A shortage of fresh water supply is a real concern, so saving on your water usage also helps the environment. Here are some ways that you can save on water.
- Get low-flow water fixtures.
- Install a rain-harvesting system for your non-potable water needs such as landscape-irrigation and cleaning.
- Use water-efficient equipment.
- Review water-dependent processes in your daily operations.
Your services and products do not have to suffer for you to save on your daily operational expenses. There are other ways that you may save on your OPEX, depending on the type of your business. When you save on your OPEX, you can increase your earnings or you may redirect the savings to efforts that will improve your business further.