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In an ever-changing business climate, the swing from being profitable to losing money can happen very quickly. You need the ability to adapt to the types of changes that occur in the wider world that affect consumer spending in order to protect your bottom line.
You need to have a strategy in place to minimize your spending without causing a drop in your service standards, or the quality of your product. With many cost-cutting exercises, there is often a risk of damaging your brand and your reputation.
Going through your outgoings to look for cost savings should be the first part of developing a strategy. Here are some areas that you should consider looking at reducing spending in.
Labor costs can often be one of the largest outlays for a business. There can often be overspending going on where staffing choices have been made for the sake of convenience, rather than for practical reasons.
If you don’t already have one, you need a system for monitoring your staffing schedule against productivity. Using a rota system and offering a variety of different staffing contracts will allow you the flexibility to get more staff in during busier periods, and have less when the workload is lighter.
Get a time and attendance system such as Mitre Finch that allows you to plan your team’s schedules, and tracks clocking in and out. This will mean that you will be paying your staff for an accurate representation of what they actually worked.
A system like Mitre Finch will also take a great deal of the work out of processing your payroll. This, in turn, becomes another labor-saving.
Renegotiate Your Contracts
Going through all of your expenditure, you will find some reasonable savings by renegotiating the amounts you are paying for things like rent, stock, utilities, and services.
Talk to new suppliers and get some rates, and tell your current suppliers that they are shopping around. You should hopefully come back with some more preferential rates either with your existing supplier or with a new company.
The same theory applies to any outsourced services that you might, such as IT support, or logistics. In addition to this, shop around for new utility suppliers, and always move with the best deal.
Your rent is potentially a large percentage of your outgoings, and this can be negotiated too. When you meet a break in your lease agreement, look for somewhere new. Use the threat of moving out of your current unit as a way of negotiating a new deal that will save you lots of money.
If you have in house systems in place like IT support, you can outsource these in order to make savings. If you are employing staff to do not essential support work, it is often easier to find external agencies that supply this service. Meaning you get the benefit of their training, technology, and team, without the need to pay the staffing or infrastructure costs.