Cost reduction: 10 tips for your company to save
Highly competitive markets, economic crisis, high tax burdens, lack of resources and so on. Most companies have felt the effects of the troubled scenario that has surrounded us in recent years.
1 – Analyze your current costs
One of the first steps when it comes to cost reduction is to know exactly how and with what your company is spending , right? After all, how can you create a strategy to reduce costs without knowing, in detail, the current situation of your company?
Many companies end up spending a lot precisely because they do not properly control their accounts. In this sense, it is important that all expenses are recorded, all of them! From the purchase of office supplies to the dinners that the commercial sector offers to customers. It doesn’t matter that at first the value seems irrelevant, the sum of irrelevance sometimes results in quite significant volumes.
The analysis of expenses by categories allows managers to analyze which sectors and activities of the company are consuming more resources than they should and, from there, it is easier to create assertive strategies for reducing costs.
It may sound silly, but often simple strategies such as reformulating the contract with the telephone company can provide huge savings. The challenge is precisely to identify what these expenses are and this is only possible through a consistent analysis of current costs.
2 – Optimize processes
The inefficiency of organizational activities is another villain when it comes to costs. The more efficient the work, the less the company spends on overtime, on electricity, not to mention that considering a broader scale, it is often possible to carry out the same work with fewer employees when it is performed properly.
For this reason, technology is a great ally of companies. Some sectors, such as finance, require a large number of daily operations, such as recording payables, receivables, etc. When companies have a system, organizing these activities becomes much simpler, faster and more dynamic.
Have you ever thought, for example, of preparing a series of reports to analyze the expenses of each sector using spreadsheets? How much time are you going to spend to map the costs that each sector is generating? Financial management software allows reports by category to be created very simply and quickly.
In addition to making operational activities more efficient, information is organized and can be accessed more easily.
3 – Renegotiate with suppliers
Have you ever stopped to analyze the purchases made and the services that your company has hired in recent months? Do your suppliers really represent the best option on the market, currently, in terms of price and deadlines? And the negotiation with these suppliers, how are you conducting this process?
Although being loyal to a supplier can bring countless benefits, it is important to always be aware of the pricing that the competition is practicing. This information can be very useful even when negotiating with your own trusted supplier.
A possible change of suppliers, in some cases, can be a solution to reduce your costs, just be careful to ensure that you are buying a product of the same quality and that the change will not affect other sectors of the company.
For example, a supplier can offer the same raw material for a lower price but deliver in a longer period of time and this could end up affecting the efficiency of your company’s productive sector. Always pay attention to these details.
4 – Consider outsourcing
Outsourcing has become an increasingly common process for companies of different sizes and that operate in the most varied areas.
Outsourcing is an alternative for companies that want to save on staff, or that are looking to reduce fixed costs . For example, by outsourcing a part of the company’s productive activity, it becomes possible to occupy a smaller space internally, which reduces possible expenses with leasing and so on.
Professionals whose job demand is sporadic can also be hired only when necessary.
5 – Create cost reduction goals
As with other company activities, cost reduction must be translated into measurable and achievable goals.
For example, when analyzing the company’s commercial sector, it was found that there was a significant increase in the amount spent on impressions. The company can create savings goals in this sense: “We want to go from 100 thousand impressions per month to 20 thousand within a period of three months”.
Is the phone bill too high? It is possible to encourage employees to use free forms of communication, such as Whatsapp and Skype. Are operational failures causing a lot of waste in the productive sector? It is possible to create a strategy to reduce operational failures through training and so on.
The important thing is that the analysis of costs and the creation of strategies to reduce them, is a continuous practice within a company to have an efficient financial management .
6 – Engage your team
It will only be possible to achieve the expected cost reduction results with the support and involvement of your team, so involve employees in your strategy. Show how important that cost reduction and process improvement is for the company and why it should be taken seriously.
Another way to get engagement is to make employees part of the formulation of the cost reduction strategy. Remember that, as part of the daily life of each sector, employees can provide relevant suggestions on how to cut expenses and improve the processes in which they are involved.
When the team helps to discover solutions, members feel more motivated to engage in actions, which enhances the results achieved.
7 – Invest in training
The more prepared your employees are to carry out an activity, the better their performance will be. The better the performance, the less time it takes to perform an activity.
Unmotivated or untrained teams end up costing companies much more, and this cost is difficult to identify.
If, at this moment, your company does not have the resources available to hire speakers or invest in external courses, encourage the managers themselves to organize training for their team. In addition to productivity gains, the results will certainly show up in your company’s finances.
8 – Analyze the benefits granted by your company
Although the benefits granted by companies are highly valued by employees, many companies end up spending more than necessary and not analyzing the return that benefits are effectively bringing to their employees.
A survey of employees can reveal what their demands are, what they consider a priority and what they think is important. It is important to always keep a critical eye on the benefits granted and not let the value get out of control.
9 – Implement a bank of hours
An alternative for companies that want to avoid the cost of overtime is to record the excess time worked in a time bank . The extra hours worked can become days off, they can be used on the day the employee needs to go to the doctor or see a presentation of the child at school, in addition, they can be used to extend vacations, amend holidays, etc.
But beware, compensation for hours must occur within the current year, otherwise the company may have problems with labor legislation.
10 – Check the forms of hiring
Fines and labor lawsuits can be an unexpected source of expenses for a company and represent a real headache for the entrepreneur. In order not to be taken by surprise, it is important to pay attention to what the legislation provides for when hiring an employee.
Many companies hire a collaborator as a service provider, in situations where this is not the most recommended alternative. The chances of the company ending up responding to a labor lawsuit in these cases are high, so it’s important to be aware.
Finally, by focusing on reducing costs, the company starts to analyze its processes in a different way and more than reducing expenses, in itself, a natural consequence of this process is to make the company more productive and competitive in the market.
