Cut SME costs without damaging your business
Develop a balanced cost-reduction strategyWhen the economy turns south, or things aren’t going to plan, the knee-jerk reaction is often to take a mighty hack at the budget. Close down an office, cut staff levels, stop advertising – these options might seem reasonable but sometimes these ‘savings’ can end up costing the business. Putting the brakes on a successful ad campaign can mean your business fades into insignificance. And other costs like redundancy settlements can sometimes be just as expensive as ‘riding out the storm’. Other hidden costs can also damage your business. Every hour which you or a manager spends agonising over cost-reduction is another hour spent not steering the business properly. Equally though, a manager who fails to address any shortfalls will not be in business very long. Missing monthly bills is one of the quickest ways to drive a business into the ground. A balanced and effective cost saving strategy does not shy away from spending money where it is needed, but equally it is not afraid of eliminating spending in areas where it is not.
Balanced and effective cost savingsThere are two key things for you to consider:
- which elements of spending add the most value to your business
- where does most of your spending go
Cutting your energy budgetFor energy-intensive businesses, gas and electricity costs can make up a significant proportion of the monthly outgoings. Sectors like manufacturing can be severely impacted by energy price rises. Energy adds value to a business, but there are ways of getting more bang out of the same energy spend.
- Managers should clamp-down on inefficient energy use making sure machines are turned off
- Buying more efficient equipment (such as energy-saving motion controls) can sometimes be a sound investment but you must make sure you work out the repayment time
- If you are metered half-hourly then you should try to perform the most energy-intensive processes at night when electricity is cheaper to purchase.
Published by Utility Helpline on
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