 Number one way to make more money is to make more money or cut some costs. Today we're going to be talking about the eight ways for you to be able to cut some costs so you can put more profits in your pockets. Hey guys, it's Wilson here, serial entrepreneur and if you're looking for more information on how to build a business, mentality, mindset strategies, tips, tricks and hacks, make sure you subscribe along the journey because I'm going to be sharing a lot more of these tactics with you. In this situation today, we are looking into a massive crisis right now. We're looking into job cuts, we're looking into restaurants closing down, businesses closing down. So that's the reason why I decided to shoot this video for you so that way we can save some costs, keep ammo in our war chest so that way we can live to fight another day and hopefully be able to build a business that's going to be thriving in the future. So without further ado, let's dive right in. Eight ways to reduce costs. Number one is roadmap. Having a roadmap is super essential for you to be able to cut costs because without knowing where you are currently, how are you going to be able to get to point B? Identifying your point A and identifying your point B allows you to create this roadmap that allows you to develop a plan, strategies in order for you to get there. So something that you need to identify is where are you spending extra costs? Where are you spending inefficiency within your business that you can cut? Identifying this is crucial for you to be able to understand how do you cut costs. In this video, I talk about business health and how you can identify the business situation for your own business. Identifying your business health is super important and having a roadmap allows you to be able to row through the dark through the days until you reach your destination. So make sure you guys have a roadmap so that way you guys can achieve cutting costs. The second way to reduce costs is tracking. Find a tracking system to understand how many people come in through the doors, tracking how much sales are you getting, what is your turn rate, how when are people leaving, what's the lifetime value of your customer. All these things are crucial for your success because when you track these numbers, then you would know what levers to pull in order to change these numbers. Without you tracking, without you understanding the fundamentals of your business, there's practically no way for you to know where the excess fats are. That's the reason why we need to not be lazy. We need to have implementing systems to make sure we track our sales, our turn rates, our inventory, everything we need to be able to track. And that's the game of the business. In order for us to have a clear view of our business, we need to start tracking. So in your business, if you're not already tracking your numbers, your KPIs, then you should definitely implement that right now. But if you're already tracking, make sure you track numbers that are meaningful for your business, then that way we can put that against a benchmark to see, are we on market rate or are we not on market rate? How can we improve? Where is it that we can trim the excess fat in order for us to reduce costs, to live another day, to find another day? Third way to reduce costs is to know your benchmarks. Knowing your benchmark is crucial. We talked about understanding our business health, understanding the roadmap of where you want to get to. We talked about tracking. Tracking is essential. Now is our time to understand the benchmarks for your specific industry. So for example, if you're looking into a restaurant industry, we know that labor costs accounts for roughly 25 to 30% of your overall revenue. Whereas if you're tracking and your labor is at 50% of your revenue, then that's a big, big red flag to allow you to see either your overspending and not being efficient with your labor. On the other hand, your revenue is way too low and you just need to be able to cut more staff in order for you to be profitable. So knowing your benchmark within your industry is crucial for the success of your business and that allows you to understand where the inefficiencies are and where are the opportunities for you to cut some costs. The fourth way for you to reduce costs is to identify your fixed and variable expenses and what does that mean? Fixed expenses are things that are fixed that regardless of how many people come in through the doors, regardless of what the traffic is like, you still need to pay this amount. An example of a fixed expense is perhaps rent. Rent is a fixed expense. It is something that you need to pay regardless of how many people come through your restaurants. You still need to pay that $2,000, $5,000, $10,000. Whereas a variable cost is something that changes and that is in a variance from the amount of people coming in. So for example, more people that come in, the more items that you serve, the more your cost of good souls would be. The more steaks you purchase, the more steaks you produce, the more steak that you're able to serve out to your customers. Vice versa, if there's not a lot of people coming through the doors, you're not selling as much steaks, then you order less steaks. And thus this becomes a variable expense. By us identifying the type of expenses that we have, we can allow ourselves to see what are some of the expenses that we're paying that are redundant, that are not needed. For example, a lot of software expenses are really redundant. They are basically a nice to have, not necessarily a fixed expense that we would think is necessary and a necessity for us to run the business. That's the reason why identifying these two expenses allows us to know which type of expenses to cut in order for us to reduce cost. If you guys find any value from this video, make sure you smash the like button, so then that way I know to create much more of these videos for you. The fifth way to reduce your cost is to upgrade, and what I mean by upgrade is upgrade the technology that you're using. For example, if you're still using a cashier that doesn't have any POS systems integrated, then it's time to upgrade to something that allows you to work on tracking seamlessly. There are a lot of POS systems out there, such as point of service systems out there that allows you to track seamlessly. For an example, when your staff comes in, they can go to this POS system, clock in. When they leave, they can clock out. That allows you to see all your labor hours just from this POS system. In addition to that, this POS system allows you to track the number of stakes you have sold, the numbers of coffees that you have sold. All this type of data are all into one place for you, which allows you to track seamlessly and allows you to be able to understand where is it that you're getting charged the most, where is it that you're overspending, where the inefficiencies are. This all comes at a cost of being upgrading. If you are still thinking whether you should be upgrading or you should just be cutting costs and so on and so forth, then this is the time to do it. This is the time for you to upgrade, spend that extra $100 in return, save the thousands of dollars that it's going to take you to manually track everything else. That's called upgrading and that's going to be able to help you save some cost. The sixth way to reduce some cost is gamification. Gamification means to make your business fun. Make it fun so that way your employees would have much more incentive to make more money for you, to have these friendly competition in order for them to actually push the sales up. So many times we go to these businesses and they have these negative culture. They're really cutthroat, they're looking at commission-based sales and that's the reason why employees fight amongst employees just to win the sale. We all see that in the retail industry. We see that restaurants that have their own tips and so on and so forth and that creates a very negative culture out there. What we're talking about is creating a positive culture, something that is gamifiable for your business. So, something that is perhaps if you have $10,000 in gross sales, you get an extra day off of your choice or something along the lines of that and then that way you can pit your employees against each other but once again in a very positive manner and in turn they're going to be able to generate more sales for you, they're going to be able to help you reduce costs by looking after your bottom line, by making sure that they don't comp that many meals, by making sure that your schedule is tight. That's how you're going to be able to reduce some cost. The seventh way for you to be able to reduce some cost is to exchange and what I mean by exchanging is exchanging your service, your time in exchange for someone else's service, someone else's time. This is something that I find super, super helpful especially if you're bootstrapping your business. I'll give you an example. I do book business consultation and I consult with small business owners and in return they give me services such as videography, such as photography and all these type of services. This allows us to be able to establish this win-win situation where for both parties we are saving costs and the only thing that we're doing is exchanging services. Same thing goes for your restaurant perhaps. If you have a service for example you want to give your free lunches to influencers in exchange they're going to be able to promote your restaurant for you. Not only do you save hundreds of thousands of dollars on influencer marketing but in turn the influencers are happy because they don't have to pay for that meal and that becomes a very good exchange of service for you to be able to save some costs. The eighth and final way for you to be able to save some cost is to buy at a discount and what I mean by that is if you're buying equipment for your restaurant, for your business or whatsoever, buy it from an auction site. Buy it at a discount. Buy it from refurbished sites because a lot of times they furnish and refurbish the item in a very very good condition and that allows you to save 20, 30, even 40% off of your goods in order for you to save some costs. Another way for you to be able to buy at a discount is to buy in bulk and buy in season. Let's say for example if you're in the restaurant industry buy fruits, buy items that are in season so in that way the cost is much lower than if you were to buy items that are not in season. So for example if I were to buy mangoes right now for our ice cream shop it is so expensive because it's not in season whereas if I bought mangoes two months earlier it is so much cheaper because they have so much supply and in turn the price is at a discount. Another bonus tip for you is if you join your local associations, business associations or any other chambers of commerce out there they often offer you discounts for insurance policy, for equipment rentals, for a lot of different things to support your business. So definitely check out your local business supports for you to be able to reduce some cost. So there you go, the eight ways in order for you to save some costs in order for you to save your animal to find the day. Number one is to have a roadmap, identify where you are currently and identify where you want to go so in that way it allows you to understand the excess fat that you can trim. And if you want to understand your business health make sure you guys check out this video because I dive deep into assessing your business health. The second way to reduce some costs is to start tracking. If you're in business make sure you always track all the different data because you don't know what is useful for you and what is not useful for you. If you don't track you would never know, you do not know which levers to pull in order for you to save cost. Point number three is benchmark, identifying your benchmark is crucial in order for you to know where you stand in comparison to the whole market. For example in the restaurant business 25 to 30 percent is labor costs whereas if you're spending 50 percent then you know you're spending too much on labor and that allows you to really focus on that pain point and on that specific note to cut your labor. Whereas if your labor is already floating at 28 percent then you know the focus shouldn't be at cutting labor it should be at somewhere else that is costing you much much more. Fourth way is to identify your fixed and variable expenses. Identifying your fixed and variable expenses allows you to know items that are redundant, allows you to understand what is it and where is it that you can trim the fact because fixed expenses are the ones that you cannot change, it's non-negotiable. It's just like rent. Once you sign a five year lease with your rent you're on the hook for five years and it's something that you don't need to think about whereas variable expense is something that you can control such as labor, cost of goods, so on and so forth. Point number five is to upgrade. Upgrading sometimes does not mean spending more money. Spending money to upgrade your POS system, upgrade your infrastructure in order for you to track accordingly allows you to save hundreds if not thousands of dollars every single year. Number six is gamification. Gamification in a positive note that pits your employees against each other allows you to build a really really strong business because they're going to have much more ownership, they're going to take care of the cost for you, they're going to look out your bottom line for you when you can design a game that works and it's fine. Number seven is to exchange. Exchange your service, your goods and your time for other people's service, other people's time so then that way you can accomplish a win-win situation. Eighth and final way is to discount. Always buy the discount if you can. Look out for your local Chamber of Commerce because they always have some great deals out there. I really hope you enjoyed this video because these are the things that I follow in order for me to cut my business costs so then that way I can put more profits in my pockets. If you guys liked this video, make sure you guys subscribe along the journey because I'm going to give you so much more business tips, strategies and hacks to build a business. If you guys want to learn a little bit more, definitely check out in the link below. Once again, I really hope you enjoyed this. I'll see you guys in the next video.