How well is your business cutting costs? Anyone who runs a business will know the need to manage the balance sheet, and that any small influencing factor here could determine long-term profitability or only reaching a break-even point. As a business manager, it’s likely you are pushed by profitability, both for your firm, your staff, your growth and to satiate your shareholders. That much is obvious and necessary.
However, sometimes, even if we’re doing well, it can be hard to see where costs can be cut effectively without losing the quality of output your firm has become known for. Cutting costs well might not be cutting costs at all, it will all depend on how frequently you do this, where you do it, how you implement it and how well you consider the long-term ramifications of your actions.
Any business can absolutely benefit from placing a more stringent eye upon their output, no matter how well they seem to be doing. There is always the potential of improving as far as your balance sheet is concerned, and making a real effort to optimize this can potentially secure future investment, make your firm even more profitable, or more able to spend on luxury expenditures that could mean plenty for the overall health of your business.
Consider the following:
It can be very important to ensure you keep the right amount of staff. Of course, constant staff layoffs can be an extremely demotivating force within your office, and hiring too many staff can simply leave people without anything to do. One of your roles as a business owner is to ensure you’re in that perfect Goldilocks zone of staff hires. One of the best methods of attaining this is listening to your staff in a certain department. They will tell you if there are too little bodies in a certain area, or if they feel there are too many cooks spoiling the broth. Almost every business leader will have to upsize or downsize at some point or another, so keep a close eye on your staff, and never be afraid to hire or fire as needed.
It can be very tempting to maintain relationships with suppliers to an undying level. This brand loyalty can often net you benefits, but sometimes it might blind you to potentially better deals and services in the future. If you read any article about setting up a business or forging connections, B2B efficiency is often something that is correctly emphasized as being incredibly important to step up. However, if this habit does not improve and become optimized as the years pass on, you might find yourself in a stuck scenario, filling out business contracts with another firm despite a much better deal staying seemingly available elsewhere. It’s important to know how to resolve these issues, and to identify them in the first place.
Routinely assess your supplier benefits compared to those you could switch to, and never be afraid to renegotiate terms with a supplier, or to try and make use of promotions. Suppliers should always be trying to retain your business, so the moment that you assess a better deal, they should try and match that. Remember that quality is sometimes worth the investment, so you shouldn’t always consider burning bridges to be the best form of renegotiating your supply. However, of course, finding the same quality for less is nothing more than simple optimization.
IT infrastructure is becoming cheaper and cheaper as the years roll on. For new businesses, this can be a very important thing to consider. Purchasing second-hand monitors, ergonomic keyboards, mice, mouse mats, opting for business subscription licenses of major software, investing in secure VPN’s, even investing in your IT staff can all be found more competitively if you search around.
It might be you purchase a round of laptops for remote working from a school upgrading their facility, or you purchase many monitors from another business closing down. The great thing about IT products is that often, peripherals are fine to be found second hand, as they do not deteriorate. However, keep in mind how cost-cutting could prevent your staff from using cutting-edge software with cutting-edge speed.
For example, if your staff only use spreadsheets for their working habit, you might not need to implement an excellent mainframe of computing power. However, if you work in a motion graphics studio and edit 4K footage quite often, rendering time will directly impact your profitability, and the ability to secure clients that enjoy a quick turnaround. It might be that the software packaging you’re using could help you save money, while also saving money on the package itself. For example, see this professional tax software comparison chart to see how utilizing different brands could save you thousands of dollars in yearly upkeep. But remember, cutting costs can always have a knock on effect, so be sure to analyze this outcome to the extent that you can.
Might it be that spending on luxury items or services could help you save money in the long term? For example, hiring a team building activity centre for a week could bring together your team and increase their effectiveness, growing the fire in their bellies while also helping the team bond together. This could slow your staff turnover and increase job satisfaction, and one week of team building activity could be less expensive than recruiting or training one new replacement employee. It might be hard to quantify how luxury spends could save you money, but often they do, as saving money is not always trimming, but adding value in the correct and appropriate places.
In summary, businesses should always be in the interest of lowering their overheads and cost. Be that through the offices they occupy, the staff they hire, the staff training programs they implement or the IT systems they set up. However, costs are not always as they seem, and could be imbuing your firm with more than the value might seem to imply. With the willingness to analyze and intelligently reason out how your firm can be affected, you’re sure to experience a healthy bottom line.