Look After The Pennies…

You can only control costs if you know that they exist, so make sure that all bills are promptly recorded in your accounting system and compile a full list of all your outgoings. You need to include everything, from utility bills to supplier costs and wages. When working out the cost of wages don’t forget to include overtime, tax and National Insurance Contributions. Affordable, easy to use software is available for all these functions

This will enable you to carry out analysis of spending in the future. It is wise to group similar costs together; such as overheads, stock, personnel etc.

You should not expect to be able to make cuts across the board. It is also important to identify and avoid the areas where cutting costs would have a detrimental effect on your business.

It might be worth contacting your existing suppliers and determining whether or not you can negotiate better rates with them, if not and you think that you are paying a premium then it might be time to find a new supplier.

Some suppliers will offer a discount if you settle your bill early – there is no harm in asking the question.

Consider whether or not buying in bulk would be cost effective for you. This will not work for everyone, for example there is no point in saving money by buying in bulk if you then have to use the savings to hire space to store the extra items.

Agree costs in advance and use purchase orders to confirm the details with your supplier. This way you know exactly what you are expected to pay and there should not be any nasty surprises.

If your costs have increased then it is likely that you should be increasing your prices in order to recoup your elevated costs.

This will make sure that you don’t price yourself out of the market and will also help you to determine what clients expect to pay for the service/product you are supplying.

Cost control should be responsibility of everyone, your staff will have many opportunities during the normal working day to save the business money; this could be something as simple as recycling paper that has been printed on one side and using it as scrap paper or sending empty ink cartridges to be refilled rather than buying brand new ones every time. Businesses often find that involving staff in coming up with ideas to reduce costs is beneficial and has better results rather than just imposing cost control measures.

Make sure that you use your time wisely and focus on your high value customers. This does not mean that you should forget or ignore those that spend the least simply minimise the time that you allocate to them.

Most people are environmentally conscious and will only take a little persuading to apply energy saving principles at work. Not only is this an environmentally responsible approach for the business to adopt it is also likely to result in savings.

Nowadays most people are aware that there are choices to be made in the domestic utility market and have no qualms about switching gas, electricity or phone supplier in search of a better deal; the same choices apply in the business market.

Setting a budget for sales and expenditure is an important part of every business plan. Your budget should be dynamic and should be subject to regular review; this will help you to determine whether or not you are achieving your goal of controlling costs.

Don’t put off implementing cost control measures in the hope that the problem will disappear, it won’t, if anything it will become a bigger problem and be increasingly more difficult to deal with the longer it is left.

It is important to remember that every little bit, no matter how insignificant it might seem, helps.