A universal truth of life in business is that your costs will always rise in one way or another. Wages will increase in line with minimum wage restrictions or market expectations. If you work in any area of business where you deal with a physical product, you will undoubtedly understand how costs change. While over time the cost of manufacturing a specific product might drop, due to economies of scale, the age of the technology involved or the prices of parts, the demand for that product may fall. The market expectations for newness drives you to find products that are more expensive to produce, and add to this the ever-rising cost of shipping due to fuel price rises, or environmental taxes.
So what controllable costs can you reduce to protect your bottom line? Having a strategy of waste reduction can improve the profitability of your organization significantly while instilling a culture of responsibility and conditions within your team.
Payroll Overspending
One of your most significant budgeting areas is probably payroll. By re-evaluating budget spending, you can save considerable amounts of money. Analysis of productivity across your schedule can highlight where you are paying for staff that you are not fully utilizing, versus being understaffed to the point that you are not efficiently meeting demand. Consider a more flexible approach to staffing, moving your team based on need. If you have staff working during times where there is little to do, find ways of making them useful.
Use a clocking-in system to ensure that you are not losing money through staff lateness.
Avoiding Damages
How much product do you lose through damages? By training your team effectively, you can reduce the amount of stock you write off through neglect. This can be improved through better organization, maintaining safe warehousing standards, not overloading pallet trucks or forklifts, and using safe manual handling procedures.
Where you do have damages, look for salvageable items that could be used as spare parts. These can at least be useful for after-sales support and may minimize potential customer returns.
Measuring Usages
By fitting flow meters on any water or gas pipelines used within your business, you can monitor usage. This can help see where you are using too much. There are environmental benefits to saving resources, and having a wastage policy surrounding these in place will make your staff more aware of the amount that they are using.
Reducing Packaging
Not only will a reduction in the amount of packaging you use help save you money, but it’s also beneficial to the environment. Customers are getting more aware of the impact of packaging on the environment, and for many, it has become a consideration when making a purchase. If there is a way of using less plastic in your packaging, then you should be looking to do this.
Reduce Consumption of Electricity
Employing a policy of turning off lights when out of the room, or fitting motion sensors will help cut your electricity bills considerably. Powering down computers and other equipment when not in use is also beneficial.
Again, saving electricity is also a great help environmentally.
Change Your Suppliers
Who supplies things like your electricity, gas, phone lines, and broadband? It’s worth periodical shopping around to see if you can get a better deal for your business by switching providers.
Modernizing Your Systems
Is the software your company is using the most efficient? Does it meet all of your needs, while integrating seamlessly with other applications needed within the business?
You might find that since starting to use your current system, others have developed rapidly and will be more beneficial to you.
Having technology on hand that automates much of the administration process can save you time and money.
Review Your Product Range
What worked for you last year might not work this year. Often businesses carry stock and services with them long after their shelf life out of a belief that because it worked in the past, it should always work. If demand is falling, it is time to think about replacing the line with something new.
Renegotiate
Whenever you get to a break in a contract, be it with a landlord, a supplier or a manufacturer, review your terms going forward. Look around for offers from others to give yourself something to barter with, but you should always be looking for a better deal. If you’ve been a good customer, they will want to keep your business. Be realistic and polite about it, and respect their business, but don’t blindly continue into another contract with a company without making sure you’re getting the best deal possible.
