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All posts tagged Cost Reduction Strategies

We’ve been working with a firm in London this week reducing their running costs by way of improving their processes and an interesting topic came to light during our diligence.

A Bad Business Approach

The director of the ‘shall stay unnamed’ company (we’re confidential!) had reduced his marketing strategy to almost zero per month but could not understand why new customers were not flocking to his eCommerce site. Well, once we briefed him on the importance of not cutting costs in value added services such as marketing and PR because they grow the business (and revenues!) he suddenly wanted to know more. Like most companies, when it comes to cost cutting they instantly reduce their marketing, advertising and offers with the thought process of “It costs money so we need to reduce it”. Cost reduction strategies are all well on good in reducing ‘dead money’ e.g. utilities, wasted resources, costly overheads and processes but they shouldn’t be implemented on business growth avenues.

Think about it. Your electricity bill costs £1200 per month, we help you to reduce it to £900 per month and you save £300 per month – great!

Bad Cost Cutting Example

You spend £4000 per month on advertising and marketing which you halve to £2000 per month, a saving of £2000 per month? No. Its actually cost you £300,000 per year! Why? The £4000 per month was generating you £600,000 of new business per year which you have just halved… make sense? In actual fact you should be considering increasing spend on business growth!

Business Solution Providers!

We don’t halve your costs across every expenditure you have, we look at the big picture; Revenue streams, new business, overheads, etc. We don’t advise you to slash your potential growth; we may suggest a new marketing company that can assist your growth which provides better value for money but we do not impact your bottom line for the worse.

Cost cutting strategies

Improving efficiency is key to any business especially in tough financial times. Good business managers recognise this; Great business managers address efficiency and make it happen!

Efficiency, productivity and the competition are linked. Improved productivity equals increased efficiency which results in a higher level of competitiveness.

Efficiency and productivity

Efficiency is about using resources to their maximum potential. Efficient companies maximise outputs from given inputs, and so minimise their costs. By addressing efficiency a business can reduce its costs and improve its competitiveness & productivity.

There is a huge difference between production and productivity.

Production is the amount made by a company in a given time frame.

Productivity measures how much each employee makes over a period of time. It is calculated by dividing the total output by the number of workers. If a manufacturing firm employs 50 staff that produces 1000 toys a day, then the productivity of each worker is:

1,000 toys/50 staff = 20 toys

Chart displaying efficiency and productivity

An increase in productivity from 20 toys to 25 toys, without increasing costs, means the company has improved it’s efficiency. The result is lower unit costs and increased profit margins.

Staff productivity depends on their skills, the quality of machines available and management effectiveness. Productivity can be improved through traininginvestment in equipment/ machines and better staff managementTraining and investment cost money in the short term, but can raise long-term productivity.

 

Cutting costs in business should be at the top of every business owners list… along with everything else!

Business Cost Management

Cutting costs in your business is a task that always needs attention. Your business will have built up hundreds, if not thousands of pounds per month of costs. Cutting costs is not an easy or straight forward task and can be extremely time consuming.

Cost Reduction Strategies

You know or may not know that you can save money be reducing your business outgoings but, believe us, there is money to be saved! Our consultants are extremely successful in finding solutions to reduce your business costs and could save you thousands of pounds each year.

Whether your spend is on phones, electric, water, web sites, marketing, fuel or IT services, 1 dash 1 can reduce any expenditure and improve your profits. Our cost cutting strategies are kept current by our commitment to research, the latest market trends and our desire to provide the very best cost reduction solutions.

Cost Reduction Consulting

Read our Our Services page to discover what we do for our customers and make sure you do not miss out on business cost savings!