By Terry Irwin.
These are hard times for many businesses, and if yours is struggling you are probably wondering what you can do reduce your costs. When doing so though, it’s important to ensure that the quality of your products and/or services is not compromised. If they are, this is likely to be an own goal that reduces customer satisfaction and, potentially, profits.
So, how can you reduce costs while maintaining quality?
One of the first places to look for areas to trim is in the procurement of your utilities and raw materials. Many businesses unknowingly overspend on everything from electricity and water to stationery and telecommunications. If you’re in the manufacturing business then it may also be possible to acquire the same raw materials or components more cheaply.
One option is to designate a competent and trustworthy member of staff to be responsible for identifying procurement issues that are costing more than they should.
It may be worthwhile hiring a procurement expert to go through your spending with a fine-tooth comb. As well as identifying where savings can be made, they may be able to locate areas where you are due refunds.
Making your business more efficient
Marketing is another prime area for trimming costs. Ask yourself if you could be communicating the same marketing messages at a lower cost. In many cases it may help significantly to shift your advertising from traditional methods such as mailshots and newspaper ads to digital marketing methods such as social media and email campaigns. As well as being less expensive, digital marketing can also prove more effective in many cases.
If your business makes substantial use of a computer network then it may be possible to streamline your IT costs. ‘Virtualisation’ is one popular method of cutting costs if your network uses multiple servers, and enables multiple operating systems and software to run off the same server. This can cut down significantly on electricity and maintenance costs in your IT department.
It may also be possible to reduce costs associated with IT by outsourcing your IT department to a dedicated company that can provide the same functions via a remote connection.
Your business can reduce costs further by adopting more efficient, greener technologies. Not only are these good for the environment, and provide a little bonus PR, they can also provide significant reductions in your fuel and power costs.
For example, if you have a large distribution fleet, it may initially cost you extra money to upgrade to greener road technologies, but in the long term the savings can be substantial. There may also be government-funded subsidies available for adopting green technologies such as solar panels.
While it may not always be easy, it is entirely possible to cut down on business costs without jeopardising quality or resorting to workforce redundancies. Some businesses even find that financial crises offer them a unique opportunity to become more effective and efficient.