Simple ways to identify which business costs to cut can be done just by looking around. Is your company ordering fresh flowers from a florist regularly? This is a cost you can simply eliminate, for example by providing a beautiful pot plant. What is the situation at break times? Is your company offering fresh coffee that sits in the pot getting thrown out at the end of the day? Try switching to a capsule coffee machine, so there is no wastage and used on an as per needed basis. By looking around the company you may be pleasantly surprised at how many costs your SME can cut that may have little to no negative impact. Begin with cutting back on costs that do not help grow your company.
Cutting administrative costs
As you begin to strive for administrative cost saving, it is important to keep two key points in mind. First, there is no single idea that is going to radically change the cost structure of your company. So as a result, this cannot be done in one go. Therefore, it is suggested that in order to reach your cost cutting goals there should be a combination of 10 or so actions. Second, the amount of organisational disruption caused by your reductions is generally proportional to the amount of cutting you do. In light of this, the reductions should be tailored to your savings goal. Incremental ideas with minimal impact on other departments can allow businesses to save up to 10% of costs.
We have looked at the most discretionary, comfort, and non-mission-critical perks and activities. Are there anymore business costs that fit into these criteria such as holiday parties, event tickets, and tuition reimbursement? Another great cost cutting initiative, is to see if you can consolidate what is left. Combine activities like training days and celebrations into single events. Combine events across multiple departments. Cross-schedule the use of outside resources, such as facilities or trainers. There are a myriad of opportunities, which might leave you pleasantly surprised.
Without going straight to layoffs to cut costs, consider those workers that may be under performing or who aren’t fully busy each day. One bottleneck could be the way inventory is handled and managed. Many small businesses, especially start ups, spend too much time sorting out their inventory and tracking it on spreadsheets. With inventory management software, staff can spend less time tracking inventory and more time doing value-adding tasks. By reducing business costs and giving employees back precious time to carry out meaningful task, it can greatly benefit your company.
Topics: business costs, cost control, cost of business