I recently published this article to help members of my audience struggling with pricing to solve their problem.
I found that a big question that a lot of people have is how do we cut down cost.
This article will show you 17 ways to do that and do it without affecting your business negatively
This is the most common way to reduce cost for your business. It is also the one people remember really quickly.
Please, while outsourcing. It is important that we stick to things we cannot do ourselves.
One of the best ways to outsource is to go on a platform like fiverr which is my best outsourcing space.
You can have everything from video adverts creation to graphic design to photo editing done for you on $5.
I have used it and I love it.
Use Co-working spaces
The fee for rent alone can drive people crazy.
If your apartment cannot help in this situation, use co-working spaces and tech hubs.
Some of them charge per month for 10-50k and others charge as low as 2k per day.
This list from techpoint.ng should help in this area.
Run an 80% remote office
This simply means that, all the people on your team must not be in the same place.
You can hire people and let them work from home.
Sheleadsafrica, a major media brand does this with their employees.
You only have to make sure all employees know what is expected of them and are effective.
Tools like zoom, join.me, skype group call, Trello, slack to name a few have made this super easy to do.
Always look for effective but less expensive ways to cut down production cost.
Note I didn’t say cheap ways because, if you focus on cheap ways, you will enter one chance.
I am currently working on two product MVPs because I want to test out my idea.
To do this, I have been able to come up with two super effective but completely affordable ways to bring the product to life.
Eva water offers a lot of two options for their water options
But, bottle used for the 50 naira option works well but, it is less of a high quality than the one used for N100.
The plastic is still a very good one and doesn’t leak into the water but, it isn’t expensive that it renders the cash flow process poor.
Always ask yourself “what is the barest form this product or service will take?”, “what are the key features it has and the fanciful features and, how can we bring the key features to life?”.
Use collaborations and partnerships.
Want to buy a raw material but it is too expensive, look for people you can share the cost with buy and then share amongst yourselves.
Want to go fabric shopping in Aba but don’t have the full money to pay two nights of hotel bill, run a small ad looking for one or two people willing to share a hotel for a night so you can all buy your fabrics and head home while reducing cost
Have some skills lacking in an area but know a friend that is great in that area, offer them a small piece of your company to pay them little money so they can do that task.
Collaboration will always save you money but, make sure you do not end up losing in a deal.
Just because you need some help doesn’t mean the other party should keep leg on your neck
Offer less variety and focus on key products and key features
Too much diversity early on in business means more cost.
A ready to wear seller can focus on just dresses
Someone in the food industry can focus on just one kind of meal and be known for the best in that area
First point out what key products people are always asking for or what product you are really good at producing
Then, map out what key features your customer enjoys from that product.
If you are still starting out, you can ask your customers what they want as your business keeps growing and then, tweak alongside that.
Buy items directly from wholesalers
The retailers will always add their own gain when selling you the products for re-sell or production.
Instead, by pass the middle man by going to hunt for your own wholesalers.
How do you find them?
Go to the local markets and ask questions, you will most likely find people who will give you directions to where you can get whatever it is you are looking for.
Another way is to research on Google for where to find wholesale products for your kind of business or rather, where to find wholesalers.
For example, someone in fashion can search “Buy wholesale fabrics in Nigeria” and options will come up.
When using the internet, always focus on keywords.
Use free or less expensive tools that can execute tasks you are executing on instead of super expensive ones.
There are lots of tools that you can use to run your business effectively that are not super expensive.
There are also a lot of free tools that you can use to run your business effectively on a budget.
Why go to pay 150,000 for a software to help you manage employee log in and log out time when you have
Why go to pay expensive funds for bulk SMS when you can use purple
Believe me when I say, everything that you want to do in your business can be done for less than any software is offering.
How can you find these tools?
You can use this site called alternative.net, it helps you find alternatives to any software or app that are less expensive.
You can use producthunt.com . Type in the keyword for the tool you are looking for. For example “quiz builder” or “pricing tool” and bam, items you can use will pop up
You can also use sniffery.com and all the alternatives will be flying out from left and right.
Instead of paying 50k for a software, hunt for their cheaper alternatives, they exist.
Avoid hiring low quality workers
I am telling you this from personal experience.
Do not say because you are trying to keep cost low or because you are just starting out, you will hire people who are sub-standard.
First, you will lose customers because of low quality production.
Second, the number of refunds the customers you are losing will bring in means even more money lost
Thirdly, you will be buying double of everything because of “okay, we can fix that for you”
Fourthly, most second hand employees are very good at wasting resources.
What do you do then if you don’t have money and are just starting out?
It might cost you more upfront but, in the long run, it will save you lots of sleepless nights, lots of money and high blood pressure
Buy high quality second hand items
First hand products may be out of your league.
Migrate to fairly used. There is a difference between fairly used and used.
Ask how long an item has been in use before purchasing it.
Test run there and there to avoid stories that touch your bank account.
Avoid buying because it is cheap and focus on buying for efficiency.
Hire only on what you need
At the last company I had, we had close to 18 staff that we didn’t need at the time.
The company wasn’t ready for it and yet, they hired and were still hiring to fill in positions for when they start dealing in that area.
I see this a lot with starting entrepreneurs. They go to bring in receptionists, marketer, sales rep, social media manager, logistics person when business hasn’t grown legs.
It is all in their business plan.
Avoid this trap and only hire for what you really need at each point in your business.
For now, I am a one woman show with freelancing, outsourcing and hiring of independent contractors all happening to get my business to where I have legs.
But, once they have legs and need those positions filled, do not hesitate because that too will cost you.
Negotiate like your life depends on it
“There is nothing like “My customer” when it comes to getting a supplier.
You need to make sure that your regular supplier isn’t using you to build house.
Ask around for the cost of something before agreeing to pay.
Have alternatives, these suppliers are usually mosquitoes
A trick I apply when negotiating, always go lower than your gut mentions.
So, if you at first feel like saying 800 when the item is 1,500 naira, say N500.
Let the person vex, it is all market and be steady in pricing.
Make sure again you have other alternatives and go hunting for alternatives if you don’t hve
Avoid registering your business until it is necessary
Please, the first thing to do after you get a business idea is not to go and register business.
If your business is just 6 months old, it isn’t the time to jump and start registering.
Unless you absolutely need to register your business when starting when starting for the government to allow you to operate, please do not bother.
You cannot start paying tax and government levies when you haven’t started making money that is stable.
This is the point to focus on marketing versus focus on looking like a “well structured business”
Structure will happen for no, gain customers and gain stable sales.
Use less expensive marketing methods
A couple of days ago, one of the people I am coaching on pricing her products well told me during a session that her adverts at the end of the month is coming to “maybe $4”.
She said she isn’t sure but Facebook just deducts here and there.
I told her it is absolutely impossible that she is running ads for a week and she is only spending $4 monthly.
Well, after she went to check her ad account, she had spent N40,000 on her adverts alone for January and was already doing close to N21,000 when month of February hasn’t finished.
There are a lot of alternatives to constant Facebook adverts when it comes to advertising and this will come in a future article ( watch this space)
Please, manage your adverts cost so that your business is not flying when it comes to money.
Know your cost
How will you know you are spending way more than you should when you don’t know what your costs are?
This coaching student of mine was burning money on ads without knowing because she didn’t know what her cost is
Pay attention to your costs and record them religiously because, the longetivity of your business is tied to it.
Apply barter method
In this case, you will be offering your service to other people in exchange for their own services.
For example, a web developer and graphic designer can offer a barter system where the graphic designer will design some templates and graphics for the web designer for free so they can sell to their customers and the web developer will build a website for the graphic designer.
You can do this in any industry, the two questions to get started are
What area of need can I help the other person with my service or how can I help them make more money?
Will I be bold enough to ask 20 people and wait for a response?
Switch from a generator to an inverter
This will save you mad cost.
When I ran ROS, my first business that has shut down, I was blowing money on electricity,
If I knew then what I know now.
Please, instead of buying a generator for your business, buy an inverter, it will save you cost a million times over.
Have very airtight refund policy
Always make sure that for people to get refunds, they send you image with video of the product having the problem they claim that it has.
Most people are experts in wearing, spoiling and returning or, just changing their minds.
Protect yourself with these policies and let the customer know about them when ordering.
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