Closely monitoring business costs gives companies the greatest chance of reporting strong profits. Firms must be able to sell its products or services in order to drive revenue, but expenditure also plays a key role in determining the overall margin.
Ideally, businesses are looking to generate sizeable turnover from a relatively low cost base - and this requires a clear focus on driving efficiencies wherever they may exist. But what can they do to minimise expenditure and ensure a greater share of revenues can be classified as profits? Here are a few suggestions:
Embrace cloud computing
When businesses move into the cloud, it frees them from the obligation to purchase software - and very often the supporting hardware - outright. Instead, they can access advanced IT services and applications on a pay-per-use basis, ensuring they select merely the functions they require. Rather than pay thousands for a new server to offer additional power and capacity, a cloud user can simply upgrade their subscription to receive extra services.
Allow the use of personal devices
If businesses are able to see past the security concerns associated with bring your own device, there are clear financial savings to be made. If employees are able to use personal smartphones and tablets at work, it reduces the need for the company to invest in mobile technology. Staff members tend to work more productively on their own devices - being more familiar with the features - so there are also potential gains in terms of output.
Reduce energy use
Businesses can take a number of simple steps to reduce their energy overheads, including turning the thermostat down, only heating the office when it is cold, and ensuring lights, PCs and other appliances are switched off when not in use. With the cost of gas and electricity continuing to rise, this can make a significant difference to many companies' bottom lines.
An increasing number of employees are eager to take advantage of home and remote working, for at least some of the time. This gives businesses the opportunity to downsize the office to reduce costs. If some or all employees are going to be working from an alternative location for some or all of the time, there is no need to have one desk and one PC per user. Employees can share the same workstations, so long as a certain proportion of the workforce stays away from the office on any one day.
Keep on top of the finances
Businesses may be able to negotiate a reduced payment on invoices settled within a short timeframe, helping to reduce costs. Paying early also reduces the likelihood of having to pay interest on credit, increasing the overall purchase price on goods. When it comes to tax, filing returns ahead of the deadline means there is no danger of facing a financial penalty for late submission.
Using video conferencing
Unless there is a specific need to meet a customer, supplier or partner in person, it may make sense to arrange a video conference. This approach may not be appropriate in the early stages of a business relationship, but further along the line can be used to save time and money. If the company leader or employee is able to avoid travelling to a meeting, it reduces transport costs and also means they spend more time on-site working as normal.
Keep a close eye on stock levels
Businesses need to be proactive in managing the inventory, striking a balance between having enough of what they need in stock but avoiding too much of a surplus. Making bulk purchases on items they cannot use or sell is tantamount to throwing money away.
Optimise the workforce
Company bosses should have a clear idea of how many employees they need for work to be completed at the optimum level of profitability. If there are too few workers, it can overburden staff members and have a negative impact on their performance and productivity. Targets may end up being missed due to a lack of manpower. But if the headcount is too high, and there is not enough work to go around, employees will work within themselves but the company will still be required to pay everyone.
Posted by Steve Williams