Top 7 Rules for Making Cost Savings
By Kate Marsden
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Try this simple maths problem – which is easier : to sell £1000 at 5% margin or to save £50 on your costs? The second one might not have quite the same buzz about it, but the profit is the same. It’s time to focus on how to make cost savings in your business, by following these simple rules.
- Make costs variable - Make whatever costs you can variable – that way if your business volumes change, so can your costs.
- Do it regularly - Regularly review what all your costs are – you may be surprised what is in there that you have forgotten about and no longer need.
- Remember people costs - Remember that the chances are people are one of your biggest costs – make sure you know that they are value for your business.
- Watch results - Watch results carefully – people are great at doing plans and business cases that show huge savings, but the reality is often different. Make sure the savings are real not imaginary.
- Focus on the big wins - You don’t want to spend your life doing this so get going on a couple of big ideas rather than endlessly chasing petty points.
- Challenge all costs - Don't assume you have the best prices and that nothing can be saved and be prepared to challenge every price.
- Be open - If you need to make big changes, tell people (including your staff and suppliers) rather than trying to hide it. You’ll get more understanding of why – and hopefully some better ideas.
Want help improving your profits? FREE reports to help Small Business Owners stop falling for the myths and start understanding the real rules of profits. Download instantly for fast profit results! Kate Marsden is The Profit Mechanic and gives resources, tools and support to Small Business Owners to improve their profits. Read more about The Profit Mechanic here.
Article Submitted On: February 28, 2012