When managing a business, the ability to contain costs is of the upmost importance. This can be a challenging task for even the most experienced manager, particularly when there are a variety of expenses that are genuinely required for the smooth running of the business.
With the economy struggling, every business is trying to cut costs to make ends meet and avoid closing down.
COST SAVING TECHNIQUES
- Negotiate with suppliers/vendors.
What you’ve been paying your vendors does not have to be the final word on what you continue paying. Ultimately, vendors want to stay in business too, and they’re dealing with a tough economy just as you are. Many are often willing to negotiate lower prices rather than lose a regular customer.
- Think beyond the cash box.
When that cash supply gets low, instead of stopping that office project or buying that important raw material consider “Trade by Bart” offer your services instead of cash to that company selling the products or offering the services you need. The worst answer you can get is a simple NO, but you might be surprised by how quickly you’ll hear a YES.
- Hire smart, inexperienced people.
Experience isn’t everything, and it costs more. Next time you put up a job ad, eliminate the line that says, “Must have X years of experience,” and replace it with “Recent graduates are welcome to apply.” You might just benefit by having employees who are “up-to-date on the latest social media and technical trends, who are often more nimble and eager to learn.”
- Cut down on employee time.
Instead of working 5 times a week or more, your employees can work for 4 days or less, it is a “win-win business strategy. This reduction could lead to increased savings in utility and operating costs, as well as a lower salary cost for the business as a whole.
- Get interns.
For positions such as marketing and other routine administrative roles, seriously consider using interns rather than full-time employees. This will help you cut back on expenses, such as salaries and size of office space. Combine this strategy with telecommuting and you’ll be able to get a lot of work done for a fraction of the cost.
- Buy in bulk.
Analyse your ongoing expenses and pin-point the ones that could purchased in large volumes from distributors/wholesalers.
- Know your customer.
If you know what your customers like, how they respond, what they want, and what they’ll spend, you eliminate all the other options from your budget. Eliminating useless options means the money you do spend is more focused and will garner a better response, so you’re not only saving money initially, but you’ll be producing more profit from what you do put forth.
- Reward your profit-makers.
Taking the proactive approach of rewarding profitable behaviour from both your employees and your customers. It means making little gestures, like an occasional free lunch or treat, to boost employee morale and keep the work environment positive.
It could also mean offering bonuses to employees who meet certain requirements for sales or productions, and offering deeper discounts or value-added packages to your most loyal customers. If you’re spending a little money on the people who do the best work for you, or purchase the most product from you, you’re simply investing in a relationship that will ultimately bring more profit to your business.
- Buy used equipment.
One person’s trash is another person’s treasure, right? Buy things like new looking furniture and equipment for your office.
- Form a buying alliance.
Join with another business or a trade association for bulk purchasing discounts.
- Reduce your business transportation/travel costs
With careful planning, you can cut back on your business transportation costs without sacrificing client meetings or new business opportunities by making good use of your phone, social media and other technological mains to communicate.