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10 ways to control business costs
1.
10 Ways to
Control Business Costs Posted on March 12, 2012 by Maya Pillai Irrespective of the size of the business, every business is trying its best to cut costs to make ends meet in a recession struck economy. For any business wishing to improve its financial status and gain some sort of stable footing in the market, controlling cost is mandatory. If a firm does not get a hold of its hidden and seen costs, it will find itself in a very uncompetitive situation with a large overhead. As a small business owner, you can control cost by maintaining an appropriate cost structure. 10 Simple Ways to Control Small Business Costs Ensure that vendor/supplier contracts do not exceed beyond a year – In brief, you need to renegotiate all your contracts annually. One mistake that many small businesses make is signing a multi-year contract, thinking it will reduce cost. When you grab a multi-year contract, it usually favors the vendor over you. Therefore, it is wise to renegotiate your contracts every year, even if it means a lot of paper work. Improve your book keeping and accounting practices – Right from the start of the business, ensure that you note down your spending and revenue. This will help you analyze where you have over spent and also where you can cut down on unnecessary expenditures. A well-organized and up-to-date record book has benefits beyond cost control. © 2012 Apptivo Inc. All rights reserved
2.
Revisit your tax
saving strategies – The impact of taxes depend on the type of business you are dealing with. Hire a good financial advisor to advice on how to make investments which would later help in tax savings. Technology will help improve productivity – There are many tools on the cloud to help your business save money, such as online invoicing, project management and others. Before buying, companies will offer free trials. This will help eliminate high overhead costs. Keep the head count constant – Every businessman knows that an employee is efficient when the revenue per employee grows. Therefore, it is wise to replace your lowest 10% of performers with new employees who match with your top 10%. It’s wise to remove the ones who are underperforming with employees who will work harder. Contemplate hiring freelancers or contract employees- There are certain areas of business that can be outsourced, it will reduce the cost of space and overhead. If you are hiring a full time employee, there are health insurance and other costs that may be associated; this will slowly eat into profit. Recycle your stationary – Using recycled paper and printing cartridges means your office is going green. Before running the shredder, check if the other side of the paper can be re-used as a scribble pad or for double-sided printing. Mother Earth will thank you for saving paper. Keep an eye on the energy consumption – Switch off lights and other equipment when not in use. This can reduce energy consumption by 25%. If possible, use laptop computers instead of a standard desktop. Laptops consume approximately 90% less energy. Reduce your phone bills – Use Skype, Google Chat or other chat services to get in touch with your employees or freelancers. You can also use web conferencing tools, such as GoToMeeting, to meet with clients online or make a presentation. It will help reduce your travel cost by a lot. Transfer inventory from vendors only when required – Certain items are kept in storage until used. Let the vendors store them until you require them. This will free your storage space. What other ideas can you come up with to control cost? Flickr image by Channy Yun © 2012 Apptivo Inc. All rights reserved
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