>More profitability doesn’t always mean having to generate more income, often, it can be what you don’t do that drives profitability. Reducing your overheads is a great example of this.
As we approach 2022, not might be the perfect time for you to look at your overheads and keep on top of your costs. Below are 5 simple steps to reducing costs ahead of the new year.
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Evaluate all of your outgoing costs.
To manage your outgoings, you need a clear view of all of the costs within your business plus how to correctly categorise them. Be clear on the direct costs of your business i.e. those costs that can be attributed to the production of your product. Having this clear distinction will make reduction decisions much easier.
Even small adjustments in software, utility bills, rent, freelance costs, essentially anything that could offer an opportunity for a reduction in the costs or open to efficiencies. -
Say goodbye to paper and say hello to paperless.
More and more businesses and/or services are going paperless to save on their outgoings. With this comes incentives and cost savings. With the advancements in technology, cloud storage, and data security are now commonplace and relatively inexpensive.
Make the most of incentives from businesses to switch to paperless. Suppliers such as Utility companies, for example, offer great reductions in prices for switching to paperless billing.
Reviewing all of your current suppliers and assessing if they offer these types of incentives can soon lower your overheads.
Re-assess your office requirements
Post-covid, working from home (WFH) is part-and-parcel of office life. That’s meant that office space has taken on a new role. Consider reducing the space that you need – could you reduce the space you require and stagger staff rotation by utilising WFH benefits.
In cases where it’s not possible to reduce your office space, consider sub-letting the space too. As businesses look to down-size their office space, you can capitalise on this to help reduce your outgoings and subsidise and rent or mortgage payments.Assign someone to manage procurement of services
This doesn’t need to be an extra hire. It can be as simple as highlighting someone’s “super power” as a shrewd negotiator to do a final pass on any purchase decisions. Typically, it’s someone that isn’t afraid to ask the hard commercial questions.
Having someone in place to assess purchases can often free up your time to work ON your business rather than IN your business.Staffing costs
Lastly, the biggest “hard” cost within most businesses is staffing costs. Ensuring staff efficiency, therefore, is business critical. A full review of staff performance is vital to have a full view of your company’s profitability and efficiency.
It may be difficult, but it’s often better to letting under-performing staff go sooner rather than later. Letting under-performing staff go can also increase staff moral and helps acknowledge the remaining workforces continued commitment to your business.