- November 23, 2017
- Posted by: Admin
- Category: Cost cutting
Effective business development is planned, deliberate, and continuous. Advance planning projects a reasonable and obtainable future revenue picture based upon past experience, environmental factors, and growth opportunities. Both actions and outcomes are projected, including projected growth based on expected areas of expansion. This is the business owner’s road-map that directs the company’s action steps to sustain what you have and grow what you want. If you don’t have a multi-year road-map for growth you should begin working on one!
For pushing the growth of the business, strategists need to understand how to maximize the results by cutting the costs that are bringing down the profit and eventually leading to uncertain future and halting growth. The management of business has to take leading role by cutting the costs to the advantage of business without affecting the revenue and profit. This article explains how the business can take a new shape by cutting the costs and maximizing the results.
By Definition: Cost management is the process of planning and controlling the budget of a business. Cost management is a form of management accounting that allows a business to predict impending expenditures to help reduce the chance of going over budget.
Here are some of the strategies that any business can take to maximize the results without affecting the revenue and profit:
Increase productivity of your staff – recognize and reward staff contributions with staff performance reviews, and teach them sales skills and how to up-sell products so customers make multiple purchases at one time
Develop new product lines – survey your customers about new products
Find new customers – new customers can help grow your business
Find new markets – use market research to determine if you could expand your business into new areas
Customer service – improve your customer service and develop a staff training program
Increase your prices – check if you have priced your goods and services correctly and if you could increase prices without reducing sales
Price discounts – consider price discounts and promotions to increase your customer base (e.g. 2-for-1 deals or happy hour)
Retail displays – use effective retail displays to increase your sales
Decrease inventory – stock control is a good way to streamline your business
Decrease direct costs – make sure you have the right suppliers for your business and negotiate for better prices or discounts for buying in bulk
Decrease indirect costs – for example, try to minimize waste and errors in your business by training staff, or reduce marketing costs by using low-cost marketing techniques
Decrease overheads – for example, save energy wherever possible or try find a cheaper energy supply company
Benchmark key financials – bench-marking your business helps you compare your costs (like rent and utilities etc.) to similar businesses in your industry to see if you are paying too much
Once you have chosen strategies to make your business more profitable, you should prioritize them in order of importance. It’s a good idea to write down your goals and the corresponding strategies to achieve them, and also how you plan to implement your strategies.
Your products or services with the highest gross profit margin are the most important to your business, as they generate more money. Once you have identified your most profitable items you should concentrate on achieving higher sales targets for them. This may require you to rethink aspects of your business or to devise strategies for improvement. Consider using a business adviser to help you.
How is your business cutting cost and maximizing results. We would love to hear your story.