In my profession I regularly speak with businesses around how they can grow, build a brand and ultimately, improve their potential success as an online business. When I first start reviewing how their business operates, I will always focus firstly on where they spend their money. It never, I repeat, never ceases to amaze me how much business owners will be able to tell you about their market share, their plans for the future and their strategy for improving sales, yet struggle to tell you a single detail around what they are doing to cut down on costs. I feel as though this is a fatal flaw in far too many businesses and whilst searching for sales and growth is great and should be actively encouraged, failure to look at what costs your business has and how you can minimize them will ensure that profitability is a long way off.
Let’s take a look at some of the most common, unnecessary costs that online businesses have and how you can fix them.
If you have an online business then let me tell you, chargebacks are not the ‘cost of doing business,’they are a pain, they are financially damaging and you need to be aggressive in your approach towards them. Many customers who are looking to grab a freebie will look at digital service providers and online businesses as a soft touch when it comes to chargebacks and of course, merchants are more than happy to give them their money back and let you foot the bill. Just because you may not be delivering a physical product which is hard to trace, that does not mean that you should accept chargebacks. You should contest chargebacks when you receive them and ensure that your business is running a tight ship regarding invoicing, receipting and logging of customer details in order to prevent these unnecessary costs.
I am well aware that it is easily done, I have been guilty in the past too, but failure to cancel magazine, online product and software subscriptions can costs businesses incredible amount of money. Most of these places will offer a free trial and then afterwards they will automatically subscribe you, months roll on an you are paying for something which you didn’t even use when it was free. I worked with a graphic design company recently who had been paying for a premium Photoshop subscription for over 5 years without noticing, which they never used. Make sure you review your outgoings in detail to avoid spending this kind of money on things that you don’t use.
Loyalty is a great weapon to have in your arsenal but that does not mean that you should keep going back to the same service providers based on your history together alone. You should be constantly searching for cheaper and fairer priced solutions in order to save your business vital cash. I worked with a media company recently who relied on the same web designer for over four years, the problem is that his prices were far above what is should be expected but the company ‘liked’ the guy and ‘had always used him’, this was all good and well but had they gone cheaper sooner, they could have created another 25 websites for the same amount of money. Nobody is saying that you need to turn your back on relationships which you have made throughout your time in business, but getting a fair price is business critical and if it comes down to a shoot out between a profitable company and a company with friends, then I’d be aiming for the former all day long.