If you own or run an SME, this is probably a great time for you. Everyone is seeking cost effective options and SMEs that offer top-notch products and services are their best bet. As you go about offering such exciting deliverables to a client, a niggling issue at the back of your mind is cost. Cost cutting is important if you want a rising bottomline without passing on the burden to your client. Smart companies are making decisions that might be difficult but prove effective in the long run.
The first of them is to retain smaller costs that might look tempting to get rid of during a slow time but are highly beneficial in the long run. Say reducing some infrastructure or people who might offer great benefits in the long run. The other interesting way to cut costs is to reduce high-maintenance customers who require tremendous time and resources with offering equivalent profits. Best Buy has done that by eliminating customers who do not pay on time or bargain to an undesirable extent.
Sure, we don’t want to cut costs that would directly hamper your end product. Therefore, you want to keep certain costs as they are. You want to have the right people in place, appropriate machinery and desired technology. So curtailing costs requires you to see what are your biggest costs and are they worth it? You also need to weigh one time and recurring costs. With all these things to consider, what are the places an SME can safely cut costs? We look at some big and small costs for SMEs and what can be done to control them.
1. Making office space viable
Office space is costly and it is important to make sure that you are saving up some money here. Mobile office is the key and it means a lot of saving for any SME because employees save time and money commuting to office and it also means a reduction in electricity and hardware costs. Therefore, encourage employees to work from home or to work at their convenience. This also means you require a smaller office space. Shared work spaces are also a great way to have a functional office at low costs.
2. Saving benefits with technology
Investing in the right technology is a simple and effective way to cut costs. SMEs are therefore investing in cloud computing options. This means you do not have to visit numerous offices because meetings can be held online and you cut costs on moving around. Most of the information can also be shared online, which reduces a lot of costs related to discussions. It also means you do not have to invest heavily in IT infrastructure.
3. Planned outsourcing
Outsourcing to the right people at the right costs is the key to cutting costs. At the same time, you want to make sure that outsourcing is the better model for you.
4. Changing purchase perceptions
To cut costs while maintaining the quality of your product, you want to ensure that you source good suppliers. The suppliers should also be able to provide the products in the desired timeframe and in exactly the way you want. Having good relations with suppliers also helps because you can bargain for better price and T&Cs.
Costs are a necessity for any business. The trick is to knock them on the head in manner that does not hurt them or your business.
