Cut Costs

Have you ever watched the show Extreme Couponing?  It is about individuals who spend a lot of time and effort mastering the art of buying hundreds of dollars of food and personal items for next to nothing.  

Don’t you wish you could do the same with your business expenses?    Well, let’s try!   

Here are five ways to cut costs in your business and in your personal life.

  1.  Identify the high cost items.  Take the time to identify the items that you spend the most money on.  Why?  Because this is where you need to focus your attention.    So, what are those items?  Is it salaries and wages, overtime, rent, or travel costs?   If it is overtime, for example, assess whether it is truly needed, question whether the activities can be carried out during normal working hours, and consider whether technology can be used in any aspect of the work. These are a few thoughts to get you started in analyzing your costs.

  1. Shop around.  It sounds obvious but sometimes, this step can be overlooked because we are in a hurry and we are not planning.  This is where having a budget is important as it helps you to identify what you need beforehand so that you have the time to do your research.  Shopping around provides you with options and gives you the opportunity to obtain the best deal, no not the cheapest, but quality for the lowest cost.

  1. Think outside the box.  Try doing business differently.  With most businesses, the highest cost is salaries and wages.   So, what can you do differently to reduce this cost?   Consider contracting out some of the work, assessing whether you need certain job functions, paying staff for performance instead of by the hour, i.e., job work or commission.    Also, you could let staff work from home, which would reduce your accommodation cost. 

  1. Negotiate.  If you purchase large quantities or purchase items frequently from a supplier, ask for a discount or simply consider long-term contracts at a reduced rate.   This is a win-win situation.  You purchase items at a lower cost and the supplier is guaranteed revenue for a length of time.

  1. Ensure the benefits exceed costs.  You know you have to spend money to make money but it is important to ensure that every dollar spent counts, and the only way to do this is to understand the benefit to be gained and to ensure that it outweighs the cost.    So, ask yourself, what is the benefit?  Is the benefit greater than the money I am spending? 

There is no doubt that applying these five tips will reduce your costs.   However, you should be tracking your expenditure.  How else would you know how much you are spending, and on what? 

You should be budgeting so you know what you need beforehand so that you can shop around, negotiate and have a chance to weigh the costs against the benefits.

Take our online program “How to Strengthen Cashflow”, we will provide and guide you with tools and techniques to reduce your costs, avoid challenges, and to increase sales. https://learningmovesmountains.com/small-business-financial-management-program/

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