11b, Reverend Ogunbiyi Street, GRA, Ikeja, Lagos

EFFECTIVE WAYS TO REDUCE COST IN BUSINESS

A good way to boost your business profit is to spend smarter. Even the minutest increase in revenue or reduction in expenses can have a big impact on business profitability. Here are smart, simple and creative ways to reduce business costs without sacrificing quality in all of your business operations.

  1. Cut down on production costs.
  • As a business owner, in order to cut costs, try not to buy more than what you need.
  • Ensure that you get the most out of your production real estate. Lease unused office space to an organization or individual that needs it and make extra cash!
  • In order to optimize the use of business resources, set performance parameters to measure your business goals and achievements. Also offer incentives when these goals are met.
  1. Narrow down your focus to the most important things.

Narrow your business focus by limiting the types of services you offer and projects you accept; it makes you more productive and qualitative. Also, rather than turn away business, maximize your capacity by subcontracting projects whenever possible. More projects mean more revenue, while subcontracting pieces would mean lowered expenses. The result is a better bottom line.

  1. Lower financial expenditures.

Review your insurance policies and financial accounts from time to time for avenues to save money.

  • Compare insurance providers for the most competitive rate, and then ask your current insurance provider to match that rate.
  • When it’s possible, consolidate insurance policies.
  • Review insurance policies regularly to ensure that you’re not duplicating coverage.
  • Excess debt affects company rating, interest rates and the ability to borrow in the future. Do a thorough cost-benefit analysis and future forecasting when considering business expansion. Consider opportunity costs and the effect of debt payments on cash flow. Don’t take on unnecessary debt.
  1. Optimize your physical space.

Analyze your current use of office space. Overflowing storage, too many supplies, piles of paper files and inefficient placement of furniture and equipment are common space wasters.

Integrate the different functions or departments of your business by using office space for dual purposes.

  1. Reduce supply expenses.

Rather than meeting traditional office supply vendors, go for large discount office material suppliers i.e. your local markets in Nigeria.

  1. Manage time efficiently.
  •  Optimizing productivity effectively reduces your costof doing business. Remember, time is money.
  • Encourage employees to concentrate on tasks.
  • Utilize software to track employee time usage and time spent on different types of work activities or projects.
  •  Set time standards to complete certain types of activities or tasks. Offer incentives for meeting and exceeding those expectations.
  •  Schedule business activities and encourage employees to adhere to their daily, weekly and monthly schedules.
  • Schedule time for meetings. Make it clear that you expect participants to be on time, to stick closely to the agenda and to wrap up at the appointed time.
  1. Maximize human resources.

Give responsibilities to the employees based on how much skill, efficiency and experience they have in those areas. Don’t use sales experts for word processing or “numbers” people for design functions. It’s important for one person to be responsible for a variety of tasks, but consider exchanging some of those tasks with another individual who shows greater efficiency.

  1. Modernize your marketing methods.

It could be worthwhile to consider cheaper advertising alternatives.

  • Get together your customer e-mail list and implement a referral program. Recommendations from current customers are more likely to result in sales than traditional marketing methods.
  • Focus more on networking than on advertising. Clients are more likely to hire a business with a face they recognize and know to be credible.
  • Do a lot of in-house marketing to cut costs further.
  • Reduce your use of traditional marketing methods and go digital.
  1. Go virtual.

Reduce business costs by scheduling online meetings wherever possible. This would help reduce travel expenses for meetings. Also centralize and record company documents online, rather than using paper.

  1. Focus on the quality of your product or service.

When a product or service is good, it sells itself. Satisfied customers increase sales through referrals and repeat purchases. Higher quality and a solid reputation allows you to charge higher prices, which equals higher revenue and a healthier bottom line.

All the best in your business!

What have you done well so far this year? What are you planning to improve?

We will be with you in the comment section.

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