5 Ways To Lower Business Costs
‘Doing more with less’ has to be one of the most frustrating buzz terms to have emerged from this recession. As much as we dislike it, the reality is that ongoing cost monitoring is something you ignore at your peril. Here we take a look at the top ways to lower small business costs.
1. Stock
As the song goes ‘Breaking up is hard to do’ but you need to ensure you get value from all suppliers.
Paying pre-recession prices for stock is still way too common. Dig out your suppliers price lists and compare them to 2008/2009 prices. Are you paying the same price but selling for less? If so, start looking around requesting quotes from at least 2 other outlets.
Sometimes you just won’t have the heave ho to demand price decreases. This doesn’t mean you can’t ask about any promotions or discounts on offer. Discounts may be available for bulk purchasing or for paying invoices within a certain number of days.
Finally, finding suppliers who do a great job will make your life easier. This is a two- way street though. Make sure your suppliers are kept in the loop about your business- invite them to training days, product demos etc so that you can work together on how best to do business.
2. Labour Costs
Despite recent inroads labour costs remain high in Ireland. Could your staff spend more time on profitable work if they didn’t have to carry out certain ‘non-core’ tasks? If yes is the answer to this question consider outsourcing these tasks. How will you know? Ask. Getting staff involved in the process will create a culture where the whole team thinks before incurring costs of any kind. Outsourcing IT, payroll and bookkeeping are other common ways to reduce costs.
Wage reductions are tricky and unpopular, but sometimes a necessary evil. It is important that any wage cuts are agreed in writing with the employee. If an employee does not sign an acceptance letter agreeing to the wage cut they may be able to bring a claim against you for unpaid wages.
3. Energy Costs
For most of us, energy costs are unavoidable but that doesn’t mean you have no control. This sector has opened up to more competition- again, shop around.
Energy saving equipment should be another consideration. Buy energy efficient lighting or power management systems for example and you can claim the full costs as a tax deduction in the year of expenditure rather that the normal write off over 8 years for other equipment. A list of the qualifying equipment can be found on the Sustainable Energy Authority of Ireland (SEAI) website – www.seai.ie
4. Telephone costs
We are constantly amazed when we see how much clients spend every year on phone bills. Consider your costs here and whether switching from your fixed line to a VOIP service would be suitable.
Small businesses are often slow or reluctant in putting staff members on company phone plans preferring to reimburse any costs on personal mobiles. This can be counterproductive as group schemes will allow you to avail of cheaper rates. Phone operators court businesses and are only too happy to arrange specialised phone packages, get looking.
5. Travel and Subsistence
By all means get out and interact with your customers. Make sure they are happy. But make sure your balance sheet is happy too by taking a bit more care in booking flights. Book in advance and consider using different airlines.
On motor expenses – shop around for insurance and consider opening business accounts with garages for diesel.
The mantra here is review, review, review. Carrying out regular cost reviews will ensure you have a tight grip on your cost base.
