Top tips for reducing costs in your business
At the start of this rollercoaster back in March 2020, survival for many meant taking hard decisions to reduce costs. Recent dramatic increases will have pushed many of these back up, but it’s worth examining whether other less necessary costs to the business have also crept in.
Savings can usually be teased out by making relatively simple changes, but businesses in serious difficulty may have to take more radical action. Below are a few examples of areas you may want to look at:
- Redesigning, reorganising, postponing or eliminating activities and initiatives that do not deliver an immediate win.
- Limiting the range of products or services you offer, to increase productivity and profit.
- Identifying elements that could be outsourced or subcontracted to reduce fixed costs.
- Measuring operational efficiency and making adjustments to optimise the use of available resources, and setting performance targets.
- Using management information systems to stay on top of cost control in areas such as labour, plant and materials.
- Streamlining your supply chain.
- Reviewing any plant requirement and deciding whether it is more cost-effective to buy or hire.
- Getting the most out of your employees’ skill sets by ensuring you have the right people in the right places and are not inhibiting them through over-management.
- Consolidating different functions or departments to eradicate overlap and duplication.
- Continuing to leverage virtual technology by deciding whether meetings are more productive and cost efficient face-to-face or online.
- Setting firm start and finish times for meetings and making sure participants come prepared, decisions are reached, and follow-up actions happen.
- Reviewing whether your marketing activity is achieving the result you expect and adjusting where necessary, and making sure you are using the best tools for your particular purposes, not wasting money that could be better spent elsewhere.
- Reducing or eliminating marketing and HR agency costs that are not adding measurable value.
- Optimising waste management.
- Consolidating financial arrangements, such as insurance policies and bank accounts, to save duplicated charges and work.
In the most serious cases, businesses may have to consider a radical overhaul, which may include laying-off staff or downsizing premises.
All that said, it’s important that owners and managers don’t become over-consumed with chasing every last penny of cost efficiency, as it’s seldom the best use of their time and can become counter-productive. Additionally, with change comes disruption and risk, so you will need to set savings goals that are right for you.