In January, we looked at part 1 on how to get rid of those saggy bums as part of our New Year Resolutions and improve our company bottom lines at the same time. To improve profitability, our ‘bottom line’, we can either boost our income, improve our costs or, more powerfully, both at the same time. Part 1 of this 2 part blog looked at how we could improve our income. How are you getting on with that? I hope you’re already implementing some new steps!
Part 2 today looks at how we can control and improve our costs (overheads) without reducing value in our company.
Controlling or Reducing Costs
Again, I would recommend brainstorming the answers to these questions and many more that you think of as you go through this process with staff, colleagues and/or trusted others. Always consider what is fit for purpose in your specific company. What will be suitable for one won’t be suitable for all.
Questions to ask yourselves and areas to consider:
For every purchase, ask yourself:
How does purchasing this item add value to my business? It’s a very powerful question to keep you focused, as a manager or business owner.
Fancy vs functional
Do you need to buy the fancier version with xyz add-ons? If you do, go for it. Otherwise, stay firmly focused on keeping your overheads down. It will boost your profits remember!
Brokers & Money Savers
How much do you currently use the services of brokers and other money savers? This could be for insurance, energy services, telephone and mobile contracts, cost reduction specialists, etc. Mostly, these services don’t cost you a penny, they do all the work and you get all the benefit of the cost savings that follow. Wow! No brainer?!!
Are they true bargains, i.e. something you regularly buy anyway? Or you just buying it because it’s a bargain that you may or may not use at some point in the future? Remember to stay focused: does this purchase add value to my business (regardless of whether it is a “bargain”)?
Yes, saving the planet can also save you money! Look up “Every Drop is Precious” who help you save water either domestically or commercially for very little cost. The money savings soon outweigh the small outlay. Look into energy saving experts and gadgets that can substantially reduce energy consumption. I’m sure you can come up with plenty more!
Check out bartercard.co.uk or simply make arrangements yourself. For example, an enterprising friend of mine bartered half a day of marketing services in return for renting office space. A definite cost saver!
Again, what is suitable for your business? Bulk buying at discount may be a great cost-saving tactic. For others, it may be a complete waste of money and actually a greater cost to store or get rid of these goods. It doesn’t always save money.
This is a real question of time vs cost. It is always sensible to obtain 3 quotes or 3 different prices for the same item. However, those who need to be as time-conscious as cost-conscious, can you use the services of a virtual PA to help you? They may well save you more money than you pay them. Alternatively, price comparison websites help save time whilst comparing costs on many items.
Reviewing your costs
Periodically review your costs and ask yourself how you can save money in each category. Choose a category a month to make it manageable. E.g. do you have to travel or could Skype or conferencing calls replace some of the trips? Do you have to post something or can you email and attach correspondence? If you must post, can you re-design the packaging to reduce the size of the item being posted?
Beware of false economy, i.e. saving money now but knowing your purchasing decision will cost you more over a longer period of time. You will need to consider the circumstances of your own organisation to assist your decision making here. It could be a case of ‘needs must’ or a longer-term, more sustainable solution versus an initial quick fix that then results in more cost in the future.
Just the beginning!
And this brainstorm on cost saving is just the beginning! Plenty to get you started and plenty more areas to look at cost savings. Treat is as a fun challenge!
It is ultimately up to you whether you want to boost your company profits. If you run a department and think it won’t make much change if other departments don’t join in, get some friendly competition going and ask if your company will reward the winners each month! I’ve not so far heard of a company that doesn’t want to save costs and I’m sure they’ll be delighted at your initiative and enthusiasm!
Please share your thoughts!
What other fantastic ways can companies save costs? Please share them here – your thoughts will be a fantastic help to others. Thank you!
Interested in our training courses and workshops?
Surprised at how commercially focused finance is in growing your business?
To find out more, please click here
Contact us for more details: firstname.lastname@example.org or call 07921 252758