24 Aug I’ve Managed To Get My Costs Down, What’s Next?
When you’ve run a successful business for a while and reduced all major costs as much as you can, you can sit back and relax a bit can’t you? What would you say if you realised that perhaps, you’re inadvertently leaving money out there on the table? One of the very first questions you should be asking yourself is – what you would do with some untapped resource of added profit?
- Would you try to make you services or products more cost-effective for your customers?
- Would you try to ease your cashflow?
- Would you be able to up your company’s value?
But when you begin to think about all these things and realise that you’re already on target and have successfully reduced costs; you begin to get more comfortable with the fact, which can make you slacken the rein so to speak. The one way to avoid complacency is to ensure that the cost reduction you have achieved by putting in so much of time, energy and effort should be sustainable.
It’s necessary to keep in view that the current market is extremely competitive and your profit margins can easily get eroded by fluctuations in market demand and increasingly price-conscious customers. This is where cost management comes in. The key to identifying whether there actually is an additional untapped resource within your company is to be more open-minded and consider these points.
Things to focus on
The first thing is to give up looking for any one single cost that will drastically alter the cost structure of your business. If a cost such as this existed, you would have likely addressed it long ago and would probably also have it under control. The second aspect is that time isn’t money- it’s far more vital than that. You need to focus on adopting a more holistic approach with reference to your company’s overheads.
When you do this, you will find that there is significant potential to catalyse further efficiencies, often in the range of 10-20%. There will almost always be some overlooked expenses or overheads that you omitted to previously consider, which can provide the answer. Most business owners focus on direct costs and large spend and feel that the smaller bills can easily be brushed-off and they aren’t worth bothering with.
However, in most SMBs, indirect services or goods and other smaller minor costs account for more than 50% of their expenditure. For instance, janitorial or stationery supplies are looked upon as small costs; but these are regular, recurring costs that can quickly add up to a considerable sum.
You need to look at aspects such as these with an expert eye and analyse your purchase ledger to identify what all these seemingly small costs are. Consolidating these can yield significant benefits for your business, from areas you may not even have considered.
When you want to optimise cost-reduction in your business, it’s a good idea to hire specialists for water and electricity audits, rent restructuring and review, managing your travel expenses and keeping a tab on regular office expenses. You can outsource your accounting, legal and cleaning requirements and more.
A company like ours can help assess areas where your business can shave off some more costs that will make a difference to your bottom line. For effective and sustainable cost reductions & efficiencies that will increase your bottom line, contact the experts at Benchmark Cost Solutions at this number – 1300 170 585. If you prefer, you can also request a call back or write to us at this email address.
Thanks for reading,
Benchmark Cost Solutions Team
1300 170 585