How Can You Better Manage Costs in a Business

A business operator should be continually re-evaluating cost components and looking for places where costs can be reduced.  Some costs are fixed and do not change unexpectedly; while others are variable (subject to change in ways you have no control over).

In today's rapidly changing world, cost changes can be expected more than ever before -so pay attention to your costs -all the time.

Always keep a tight control on business finances. The better you track finances the more aware you will be of how a business is performing.

Typical cost components might be:

• Unavoidable fixed costs (e.g. wages, rent, rates, stationary, utilities, professional fees (e.g. accountant, solicitor).
• Equipment and materials.
• Marketing - sales, advertising, distribution, etc.
• Maintenance - maintaining equipment, property,
• Employing new staff.
• Contingency costs - insurance; losses due to accident, injury, difficulty with trading partners.
• Financial - costs can be maximised or minimised by how you use money as well as how much you use (e.g. depreciation, taxation, rebates and subsidies from government, etc.
  
  

Ways to Save on Costs

Here are just some ways you might find it possible to cut costs:

1. Plan for the future -Certain things might be hard to avoid in the short term, but in many businesses, there are costs that can be reduced eventually because the manager is not looking far enough ahead.
2. Automate where you can - Computers, robotics and technology are continually replacing work roles and allowing businesses to do more with less staff. If you don't adopt automation and others do, a productivity gap will open between you and your competitors.
3. Shop around – find cheaper suppliers
4. Negotiate hard
5. Buy in  bulk
6. Include advertising mailing with other mailing such as invoices
7. Set up less expensive outlets (eg. an online store or "pop up" shop, rather than permanent physical shopfront)
8. Buy used equipment for your office
9. If you are in a trade – check your trade association for cheaper insurance premiums (they often exist)
10. Lease equipment instead of buying it (they usually attract a maintenance contract too)
11. Pay your sales force through commission based incentives
12. Make sure your mailing list is up to date (may save postage or manpower dealing with incorrect addresses)
13. Don’t give credit or do so reluctantly
14. Transfer risk by using a payment service such as paypal to process payments
15. Don’t print (or produce) anything unless totally necessary
16. Take advantage of free software
17. Make your own forms rather than outsourcing to a printer
18. Hire people that can multi-task, and are receptive to varied roles
19. Research and development – not essential spending in the short term, but often is in the long term
20. Marketing – make sure the business’s marketing plan is current – strategies used in the set-up phase may be redundant later (e.g. advertising in a newspaper gets a business 20 years later though it is no longer worthwhile still advertising in this paper.