Smart website management requires a balance of both revenue and expenses to achieve a healthy profit and healthy growth.
When the economy is growing strongly, it is of course much easier to grow revenue as well.
Businesses spend more on advertising, they make more money and they often increase their advertising budgets in response to their growth in revenue.
Websites that rely on advertising for most if not all of their revenue will benefit greatly from this increase in advertising.
They may even be tempted to increase their expenses by using the profits to invest in content, people and technology.
So revenue in a strong economy drives growth and brings the expenses along with it.
When Expenses Lead Revenue
But the opposite is true as well when the economy starts to slow. It is especially true during a recession like the deep downturn in 2008.
When economic and advertising growth begin to moderate, they put pressure on the bottom line for websites.
When those slowing growth trends turn into declines — especially deep declines — it becomes time for a much greater focus on strong cost controls.
Someone once said about business management, “You can’t cut your way to greatness.”
Yes, that’s true, but a website publisher can find ways to cut expenses that will protect profits.
Those that don’t will face the same fate as many Internet companies in the late 1990s and many companies in a variety of industries during the 2008 Great Recession.
They end up going out of business.
5 Ways to Cut Website Expenses
Every website has a different organizational structure and different expenses based on their specific circumstances. But some categories are open to cutting in every case.
1 – Reduce Labor
Reducing labor doesn’t always mean laying off people. Labor has a broader meaning.
A site that uses contractors can reduce the hours or the number of contractors. They also can try to negotiate lower rates.
If only one person is involved in a site, that person can cut back his or her hours on that site. They can then use the freed time to focus on other priorities of website management.
2 – Reduce or Eliminate Advertising
In traditional media, external advertising is one of the first expense categories to get cut. It is more essential for the growth of the business than the survival of it.
For website promotion, campaigns on the likes of Google or Facebook are easy to cut as daily budgets by targeting less expensive keywords or fewer keywords.
3 – Reduce or Eliminate Travel
Not all websites have travel expenses, but many do in the form of trips to workshops, seminars and conferences.
Some sites also require travel if they focus on … travel. Others with a sports or recreation theme also include travel time. They may not be able to cut their travel budgets by much.
But all travel budgets have room for reductions. Again, traditional media sites cut travel as one of the first expenses to reduce. It often isn’t essential to the survival of the site.
4 – Reduce Hosting Costs
Cutting the cost of hosting may at first glance seem like an odd suggestion because many people assume it’s mostly a fixed cost. But it doesn’t have to be fixed.
A reduction in advertising will decrease bandwidth. Time spent on deleting old, unused photos will increase disk space. Time spent on site optimization will result in less bandwidth and fewer database demands.
Otherwise, consider moving the hosting to a new provider who has lower rates.