HOW TO CUT COSTS IN BUSINESS WITHOUT ANY DOWNSIDES Oct 15th
You don’t have to go into debt, compromise quality or performance to cut business costs. There are significant ways to save money without compromise. How? Most of the techniques revolve around “productivity transfer,” where you get the same results by using alternative resources at a lower cost point. Here’s how:
1. The Power Of Pooling
Pooling takes some effort, but the savings can be huge. Contact other providers in your industry that buy from the same suppliers you do. Agree to work exclusively with one supplier for a period of time (I suggest minimally 3 years). Pool your combined purchasing power (and determine the savings you want – for example a 25% cut). Then go to the suppliers and tell them that you are all going to buy from the one vendor who offers the best price and the best deal. You and each of your providers will still buy with your money, but you’ll commit that money to that one vendor. The big numbers are very attractive to buyers and they may offer you a bargain.
2. Contractors
Businesses can significantly cut costs by leveraging contractors instead of maintaining a full-time workforce. Many full-time employees may not be consistently engaged, leading to idle hours and unnecessary expenses. Hiring contractors allows companies to pay only for the actual hours worked, providing a cost-effective solution. Contractors, being highly skilled and often able to serve multiple clients simultaneously, can bring specialized expertise to projects. This approach creates a win-win situation – contractors earn more per hour, and businesses pay only for the specific services they require. As an example, consider a facility management company that encounters sporadic demands for drain cleaning services. By enlisting drain cleaning contractors, including those that offer services like Commercial Drainage by Express Drainage Solutions or similar companies, on an as-needed basis, the company can promptly tackle urgent issues without incurring the fixed costs associated with maintaining a full-time plumbing team. This strategic utilization of contractors can not only streamline costs but also uphold a superior level of service quality.
3. Outsourced Work
One of the most effective ways of cutting business costs is by having certain tasks, functions, and roles managed by external service providers. This reduces your need to maintain a large workspace and pay for the transportation costs of employees. And if you’re left with no choice but to lay off employees due to inadequate funds, you could choose outsourcing companies to take care of the work for you at a lower rate than the collective salaries of employees. What’s more, you can outsource several tasks. You could avail e-mail marketing services from Simplelists for your marketing plan; have your accounts taken care of by external accounting service providers; or even have your logistics department managed externally. There is a growing supply and demand for outsourcing, rendering it a great solution for cutting down business costs.
4. Telephone Costs
Telephone systems are expensive. Really expensive. But by combining a few free, and near free, services you can save tons of money, and the quality and flexibility of your system may increase. Try using Free Conferencing for free conference call services; Skype’s premium business phone (which is less than $3 a month) is great; and Grasshopper has a virtual phone system that can cover as many employees as you want.
5. The Office Space
The recurring cost of renting office space is usually the largest SG&A costs on an income statement. Good times or bad, every month you’ve gotta pay that rent. You have three options that can save you big money.
First, convert your business to a virtual presence. You can have your employees work from home and get rid of the office in its entirety.
Second, approach other spaces that already have tenants committed to long leases. More and more tenants have extra space, and you may be able to pick it up on the cheap (or in my personal case, I got the space for free).
Third, renegotiate with your landlord. With a soft demand for office space, landlords are becoming more and more flexible on the rent, to keep you in.
Sometimes, however, it’s not entirely possible to do without proper office space, in which case you need to find a property specialist you can trust to help find your office space New Malden.
6. Interns & Differently Abled Organizations
There’s a whole workforce of talent that most companies overlook-interns and people with disabilities. They have the talent and intelligence, but not much experience. Reach out to the local colleges for interns, and in exchange for pay, work with the college to give the student much need college credits. Contact organizations that can staff you with people with disabilities. Both represent talented, hardworking people, and often at a cost that is much lower than what you are paying now, simply because they don’t have the experience. We all started there!
7. Bottom Line Responsibility
One of the most overlooked methods of radically cutting costs, without compromising the business in any way, is to seek guidance from your team. Have a company wide meeting and educate your employees on the P&L and the need to cut costs. Empower them to bring suggestions to the table and to act on them directly. One company, for instance, had an employee who suggested everyone bring in a coffee mug from home instead of using disposable cups. It saves the company $100 a month. Similar ideas were implemented throughout the company, and the company turned profitable as a result.
Oct 15th
You don’t have to go into debt, compromise quality or performance to cut business costs. There are significant ways to save money without compromise. How? Most of the techniques revolve around “productivity transfer,” where you get the same results by using alternative resources at a lower cost point. Here’s how:
1. The Power Of Pooling
Pooling takes some effort, but the savings can be huge. Contact other providers in your industry that buy from the same suppliers you do. Agree to work exclusively with one supplier for a period of time (I suggest minimally 3 years). Pool your combined purchasing power (and determine the savings you want – for example a 25% cut). Then go to the suppliers and tell them that you are all going to buy from the one vendor who offers the best price and the best deal. You and each of your providers will still buy with your money, but you’ll commit that money to that one vendor. The big numbers are very attractive to buyers and they may offer you a bargain.
2. Contractors
Businesses can significantly cut costs by leveraging contractors instead of maintaining a full-time workforce. Many full-time employees may not be consistently engaged, leading to idle hours and unnecessary expenses. Hiring contractors allows companies to pay only for the actual hours worked, providing a cost-effective solution. Contractors, being highly skilled and often able to serve multiple clients simultaneously, can bring specialized expertise to projects. This approach creates a win-win situation – contractors earn more per hour, and businesses pay only for the specific services they require. As an example, consider a facility management company that encounters sporadic demands for drain cleaning services. By enlisting drain cleaning contractors, including those that offer services like Commercial Drainage by Express Drainage Solutions or similar companies, on an as-needed basis, the company can promptly tackle urgent issues without incurring the fixed costs associated with maintaining a full-time plumbing team. This strategic utilization of contractors can not only streamline costs but also uphold a superior level of service quality.
3. Outsourced Work
One of the most effective ways of cutting business costs is by having certain tasks, functions, and roles managed by external service providers. This reduces your need to maintain a large workspace and pay for the transportation costs of employees. And if you’re left with no choice but to lay off employees due to inadequate funds, you could choose outsourcing companies to take care of the work for you at a lower rate than the collective salaries of employees. What’s more, you can outsource several tasks. You could avail e-mail marketing services from Simplelists for your marketing plan; have your accounts taken care of by external accounting service providers; or even have your logistics department managed externally. There is a growing supply and demand for outsourcing, rendering it a great solution for cutting down business costs.
4. Telephone Costs
Telephone systems are expensive. Really expensive. But by combining a few free, and near free, services you can save tons of money, and the quality and flexibility of your system may increase. Try using Free Conferencing for free conference call services; Skype’s premium business phone (which is less than $3 a month) is great; and Grasshopper has a virtual phone system that can cover as many employees as you want.
5. The Office Space
The recurring cost of renting office space is usually the largest SG&A costs on an income statement. Good times or bad, every month you’ve gotta pay that rent. You have three options that can save you big money.
First, convert your business to a virtual presence. You can have your employees work from home and get rid of the office in its entirety.
Second, approach other spaces that already have tenants committed to long leases. More and more tenants have extra space, and you may be able to pick it up on the cheap (or in my personal case, I got the space for free).
Third, renegotiate with your landlord. With a soft demand for office space, landlords are becoming more and more flexible on the rent, to keep you in.
Sometimes, however, it’s not entirely possible to do without proper office space, in which case you need to find a property specialist you can trust to help find your office space New Malden.
6. Interns & Differently Abled Organizations
There’s a whole workforce of talent that most companies overlook-interns and people with disabilities. They have the talent and intelligence, but not much experience. Reach out to the local colleges for interns, and in exchange for pay, work with the college to give the student much need college credits. Contact organizations that can staff you with people with disabilities. Both represent talented, hardworking people, and often at a cost that is much lower than what you are paying now, simply because they don’t have the experience. We all started there!
7. Bottom Line Responsibility
One of the most overlooked methods of radically cutting costs, without compromising the business in any way, is to seek guidance from your team. Have a company wide meeting and educate your employees on the P&L and the need to cut costs. Empower them to bring suggestions to the table and to act on them directly. One company, for instance, had an employee who suggested everyone bring in a coffee mug from home instead of using disposable cups. It saves the company $100 a month. Similar ideas were implemented throughout the company, and the company turned profitable as a result.
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