Cracking Down On Costs
Neil Bromage has run his own small business and is a freelance business writer working on a range of newspapers including The Times, Sunday Times, Telegraph and Financial Mail on Sunday. This book is based on a wide range of columns and Q&As written and answered by Neil for Business Link over a number of years. He is based near Preston, Lancs.
One of the keys to running a successful business is to keep your costs well under control. Cutting costs can bring immediate savings, keep you competitive and improve your profits. To do this you need to examine every single part of your business to see where and how savings can be made, and to do it on a regular basis.
Banking is a good place to start. Ensure you stay in credit by monitoring transactions closely, ideally with an online banking service. Avoid unauthorised borrowing and the high levels of interest it attracts. If you need additional finance, consider alternatives such as factoring, hire purchase and contract hire.
Shopping around and negotiating the best deals can save you money on everything from insurance, financing, banking and advertising to printing, stationery, computers and energy bills. The list is endless. Expert consultants can also help you reduce costs in particular areas, particularly if they work on a ‘no win, no fee’ basis. However, whilst there will undoubtedly be areas where you can make significant savings, you should think carefully about the consequences before you implement any changes. Sometimes cost-cutting can result in a reduction of the quality of what you produce. Or there can be unforeseen outcomes, such as over-dependence on a single supplier who may then go bust or even refuse to supply you because you have forced the margins down too far.
Above all. tread carefully before making changes that affect your employees. Cancelling staff training or downgrading company cars could end up proving counterproductive. In particular, any changes which have a direct bearing on employees’ terms and conditions could bring all sorts of legal trouble.