Take time to reflect on how cost efficient your business is…

May 25, 2017
Artistic or what?

 

When working in business it can be hard to find time to take a step back and reflect on the direction your business is going in and whether or not you are on the right track. We have put together the following suggestions that can make your business more cost effective.

Employee involvement & encouragement

A crucial first step is to ensure that your employees are aware of your intentions to become more cost efficient. Remember, your employees may be able to provide valuable insights into any unnecessary costs incurred to your business. Involve them in this process to make them feel more accountable for their direct costs.

Tackle the biggest costs first

It is a good idea to look at the greatest outgoings of your business to see if anything can be saved here – before moving on to the less significant areas. At the same time, focusing on areas where even the smallest percentage can be saved can help to make your employees more cost aware and even the smallest savings add up in the long run!

 Review office systems

Many SME’s are becoming wise to the beneficial effects of cloud computing; using third parties to provide services which were previously completed in house. There are many benefits associated with the use of cloud computing, including: eliminate the need to have IT professionals on site, remote access to data – which increases flexible working for employees. The charges are also usually calculated as price per user – resulting in significant savings.

Outsourcing, in general, can result in substantial cost savings & greater productivity and efficiency as the business is able to focus more on its core functions.

Review your outgoings

It can be easy for business costs to creep up without you noticing; arranging regular reviews is a good way to monitor where your money is going. Through this you will be able to detect any particular areas where you could cut costs.

Some cost-conscious businesses set the target of a certain percentage reduction to be made each year – keeping cost cutting high on the agenda and embedding this ethos within your company culture.

If making labour reductions – don’t go overboard

Although it is good to be cost conscious to a certain degree; you also don’t want to make cuts which will leave you without key human resources. When economy and market conditions change you may wish you hadn’t been as extreme with your cuts and the last thing you want to do is negatively impact employee morale. A most positive way of reducing labour costs may be to introduce measures to improve employee retention.

Supplier negotiations

Sometimes the supply process can incur unnecessary costs. Trying to negotiate a better cost with a supplier is not cheeky and they will be keen to retain your business. Especially in cases where you have shown loyalty to a particular supplier, you are well within your rights to try and negotiate a price in exchange for your continued loyalty.

 Pay attention

Additional ways to make your business more cost conscious include monitoring any excess stock – to ensure you are only ordering what you use. Also, monitor sources which cause repeated errors and need rework. It may be that further staff training is required to make in-house activities more efficient in the long run – saving you money and time! It is also worth monitoring excess stock which never gets used or expires as this could be a source of unnecessary cost.

Walker Begley have worked with a range of SME’s and self-employed individuals over the years to increase cost efficiency. If you would like more information, please get in touch to find out how your business can work to become a more cost efficient enterprise.

 

 

© Walker Begley 2016. All rights reserved. Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. WB Financial Management Ltd is an appointed representative of LJ Financial Planning Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales no. 5280582

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