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Business on a diet – trimming costs print Print

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Every business owner wants their business to be lean and efficient, without the burden of unnecessary costs or redundant processes.

Trimming your expenses is generally the quickest and easiest way to improve the profitability of your business. Introducing a cost-control system can bring immediate savings and ensure you remain competitive in the longer term.

Quick savings

Want to start saving money straight away? Here are some of the most tried and true ways of trimming costs.

  • Eliminate inefficiency by identifying manual, paper-based systems that could be computerised.
  • Reduce travel costs by combining trips or avoiding unnecessary air travel.
  • Cut non-essential or redundant services - unused telephone lines and magazine subscriptions, or outdated technology.
  • Reduce physical waste - recycle or consider reusing cardboard and packaging materials.
  • Reduce paper-use - print double-sided, or reuse computer paper for jotting down notes or memos.

Remember, some savings might only yield modest gains but every little bit adds up. You might be surprised how much you can achieve by making modest savings across a few key areas.

Reduce energy costs

There are some impressive gains to be had by reducing your energy consumption, or changing to a cheaper electricity provider. Start with the following.

  • Turn off any equipment not in use and set computers and office equipment to go into 'standby' mode after 10 minutes.
  • Choose energy-efficient appliances and office equipment whenever possible - look for the Energy Star mark.
  • Fix timers to office equipment and lights so they switch off at the end of the day.
  • Implement a "Switch Off" campaign with staff.

Want to know if you are getting the best deal from your electricity provider? Visit What's My Number - a New Zealand Government-provided service - to quickly compare providers. If you find a better deal, you can switch providers online with only a few clicks - easy.

Trim your marketing budget

Marketing costs can really add up, from engaging a consultant to printing costs. Most businesses keep their marketing costs manageable by measuring the return on all advertising and eliminating what doesn't work.

If you need to trim your marketing budget, you might be surprised how much you can save by completing your marketing material in-house. Here are some options.

  • Use Facebook to create a business page and allocate time to interact with followers and attract new interest - uploading photographs and engaging users in conversation is a good start.
  • Use Twitter to update your customers on current deals, or make important announcements.
  • Use WordPress to expand your brand online with a blog, a website, or both.

Make use of technology

Being tech-savvy shouldn't leave you out of pocket - there are many ways free (or low-cost) technology services can help you save money on everyday business expenses. There are some options to consider.

  • Use Cloud-based services such as Google Drive to store data and collaborate on documents.
  • Purchase a smartphone to access email on-the-go, set up meetings, and connect with employees.
  • Use Internet calling such as Skype to meet with clients or employees who are out of town.

Cloud-based services store data and create documents online, meaning your data can be accessed from any computer with Internet access. This means you could collaborate on a work project while you are away overseas, or if you are working from home. Many businesses also use Cloud services to back up their important information. Some providers can even automate this process; saving you time and removing the need for additional computers and storage drives.

Long-term savings opportunities

For longer-term savings, there are a variety of options you can consider - depending on your business objectives and cash flow situation.
Here are some additional options.

  • Can you save on wages by outsourcing some work, or employing someone on a part-time basis rather than full-time?
  • Consolidate purchasing with fewer suppliers to get better discounts and build strong relationships.
  • If insurance costs are high, try searching for a new, cheaper supplier. Agree to long-term supply contracts or annual purchase volumes in return for lower prices, and negotiate longer payment terms.
  • Trim back your product range and increase production runs.
    Get the most out of your premises by sub-letting spare space, or consider downsizing.

Avoiding pitfalls and measuring success

Cutting costs can be a balancing act between trimming the fat and slicing too close to the bone and damaging your operational capacity. You can remove most of the risk by periodically reviewing what you're doing and how well you're doing it. Consider asking employees before trimming some costs - they might have some additional ideas or be able to highlight any potential problems that are easily overlooked.

Before you make any changes, check your standards won't be compromised and your ability to meet objectives won't be harmed. For example:

  • Over-dependence on one supplier puts you at risk if the supplier fails.
  • Tighter control of financing may leave you with no safety margin when cash flow is unexpectedly poor.
  • Cutting short-term 'investment' costs such as training, advertising, equipment or new product development can lead to long-term weaknesses.

Remember, any changes you make don't necessarily need to be permanent - you could trial a new cost-saving initiative to see if it works for you. If a cost-saving measure wasn't as good as you'd hoped, you could always go back to the drawing board and research other options. Try talking to other businesses to see what works for them - even businesses in other industries might have some effective cost-saving initiatives you might have overlooked.

You can always talk to us for support and advice before making a difficult business decision - we're here to help.

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