If cash-flow is an issue, or you are just looking for ways to cut costs to boost profitability, here’s our collection of money saving ideas.
We’re really keen to hear your views, so if you have your own cost-cutting tip please share it with our readers. You can comment directly on this article or email us.
Also check out last month’s tips to help you frame the right mindset for cost-cutting.
Master your finances
An in-depth, up-to-date awareness of your financial position is crucial. Use financial tools to help you keep track. If your finger is firmly on the financial pulse you’ll be more able to identify cost rises (such as rising energy costs, interest or currency rates) and react to them quickly.
Make every penny count
It’s easy to get wrapped up in the big costs and forget about the little ones. Go through every budget line-by-line, examining each individual cost. For each, identify waste and areas where costs can be trimmed.
Set goals
Once you’ve identified areas for potential cost savings, set reduction targets. Be ambitious but also be realistic, so you don’t impact the quality and effectiveness of your operations.
Consult your employees
Every employee - from top to bottom - has their own area of expertise. Ask them to look within their world and identify where money is wasted and how costs could be cut. (Make sure your cost-cutting moves are seen as positive steps to avoid waste rather than desperate attempts to raise cash.)
Pick your battles
The adage goes that 80 per cent of your sales come from 20 per cent of your customers. Identify high-value customers and make it your priority keep them loyal. Cut costs by exhausting less resources on your least valuable customers.
Shop around
Suppliers - from gas companies to professional services firms - might be reducing prices to boost sales, so shop around to find the best value. Your current suppliers might also be open to price negotiations to retain your loyal custom. (Read about negotiation).
Save energy
Calculate your carbon footprint and work out ways to cut it (which could be as simple as turning monitors off standby at night). Every tonne of carbon cut saves the environment and saves your money.
Get people talking
Customer recommendations and word-of-mouth are powerful marketing tools. If you have a satisfied and loyal customer base, figuring out ways to get them talking (such as refer a friend schemes or viral email campaigns) could help cut other more costly acquisition marketing activities.
Review your IT
Look at open source or hosted cloud software services as a way to reduce IT hardware/software costs. Go paperless; a paperless office could cut your stationary costs and help save the environment.
Enable mobile working
Nowadays, many employees who regularly attend off-site meetings are equipped with portable computers. Adding the ability to get online - via mobile broadband connections, for example - could enable employees to work remotely in-between meetings, minimising travel expenses.
Tighten up your supply chain
Work with suppliers, partners (and potentially customers) to improve supply chain management. This could lead to better managed logistics, increased process efficiencies or a reduction in waste or stock / raw material requirements.
Cut recruitment costs
Your current employees might already know the perfect candidate, so try referral schemes to source job applicants. Recruit direct (but be sure your recruitment practices are up to scratch) and/or advertise on online job sites. Recruit internally by developing existing staff into new roles.
Work with students
Students crave experience, are hungry to do well, and come from their studies brimming with ideas. They are a valuable, cost-effective talent pool.
Show employees you care
If employees feel valued they are more likely to be motivated, productive and loyal. That translates into increased efficiencies and reduced recruitment costs.
Offer benefits in kind
If you can’t afford to give pay rises, explore benefits in kind instead. You could offer benefits such as gym membership, luncheon vouchers or health insurance; or you could even distribute share capital to key talent.
Conduct virtual meetings
Use voice over IP, webcams or video-conferencing to conduct virtual meetings. Explore online collaborative tools which let participants simultaneously work on documents in real time. Such services offer benefits which counter-act the lack of face to face contact, and also help minimise travel costs.
Bootstrap projects
The term bootstrapping is often used to characterise how many ‘dot com’ ventures develop new, early-stage ideas. It’s the art of proving a concept with next to no cash, and usually encourages lots of imagination and ingenuity. Not a suitable approach for all projects, but for some, it may reduce risk, minimise cost and spur innovation.
Innovate
A new idea (or an old idea that is new to you) which solves a costly problem could help improve the cost-efficiency of your processes. Innovation could also improve the quality of your products and services, delivering competitive advantage.
The best tip we have for cost-cutting is “inertia removal”
20 sales calls a day from companies “promising to cut the cost of….” has only one result, you do nothing.
Make a postive reminder to think of one topic per month and when the sales call arrives listen and consider the options. Perhaps then go to a Business Xchange meeting and compare offers?
As an advice business we deal in some pretty hated areas such as telephones and power. In 12 months both these markets have experienced dramatic price shifts yet inertia is stopping managers from taking action.
Examples.
1.Last month we promoted a special electricity deal.
Respondents would have received half-price electricity for 9 months (absolutely no other commitments or hidden costs). We placed just few contracts, yet combined savinsg exceeded £30,000. 297 businesses simply ignored it! Power has since risen by another 20%!
2. Telephone call prices have dropped like a stone.
Stop thinking 1.5ppm but think under 1p.
That’ a 30% saving for nothing!
The next tip is control travel by looking at travel costs and partial home working.
Placing a tracker in your vehicle costs 30p/day, that’s less than the cost of driving one mile!
If controlling distance/mileage claims is not impressing you then remember that a good tracker can also record and store all business/personal mileage; if the tax man suggests you have overclaimed then you have the records (at no added cost) that prove you’re right!
Finally we can talk Rubbish and the best tip we have……
Business rubbish skips (Euro bins) vary hugely in price and contracts are normally “evergreen” (don’t cancel and then automatically renew) so it makes moving very difficult. But the answer is simple.
Make a note every time you start a contract (phones, rubbish, power etc) of the date you need to give notice to cancel the contract. Using MS Outlook you’ll get the reminder pinging in front of you until you lose the will to live but the best way of sharpening the salesmans pencil is to wave a contract cancellation notice in his face!
Tips originally submitted via email by:
Andrew Holford
REMEDi
08445 68 68 80
http://www.remedi.me.uk/