Management of Costs
The management of costs is an ongoing problem for small business operators. The process commences with purchasing key products, required for your business, at the right price, receiving the goods you paid for and then carefully checking the quality of the products. Part of the cost control process includes:
- Appropriate security, where the goods are stored.
- Obtaining support from key suppliers:
- Making specialist staff or personalities available to help in sales promotional campaigns; and
- Advertising/marketing contribution by suppliers.
- Analyse purchases – identify if too many small orders are being placed, which can incur extra freight costs.
- Labour efficiencies need to be continually monitored.
- Discuss waste management with team members.
- Discuss productivity with team members, and identify areas where they might be able to improve their productivity.
Many businesses have found it quite beneficial to benchmark their labour costs and other operating costs with similar organisations, to gain an insight into areas where costs might vary form one business to another.
Calculating gross profit percentage, on as many product lines as possible, can also be a significant tool, to assist with the identification of excessive costs.
There are many key overhead expenses, which require continual management, to try to reduce costs. These could include:
- Electricity – would your business benefit from an energy audit?
- Telephone – perhaps use Skype or have discussions through webinars, to reduce telephone costs.
A CCH survey, earlier this year, identified ‘management of costs’ as the major concern of 1,018 business owners, who participated in the survey.
If you would like to have a discussion with us on strategies to reduce your costs, please do not hesitate to contact us.
