Reducing indirect expenses involves a lot more than simply shopping around for the lowest price. While there can be great savings to be found from contacting a provider and asking for a lower rate, that is a short-term solution that can simply go away upon the next round of price increases.
Cutting costs is a great way to grow your bottom line since it impacts it directly. Finding those ways to save can sometimes seem like a daunting task and often you just don’t have enough time or resources to spend on that activity. Perhaps your time is better spent growing the business from the top line. Should you decide to evaluate the opportunities for cutting costs, here are five ways you can get started.
Expense reduction is a complex exercise in the area of strategic thinking. Although it sometimes feels like a straightforward activity that involves beating down a supplier for better prices, it is much more complicated than that. Consider the well-known fact that nothing is free in this world. If you beat down a supplier on price, he is not simply going to hand you the discount without some reduction in service. For example, maybe he won’t rush to get to your orders next time around. After all, he’s not making much money off of your business anyway and when other more profitable business is pending, you get moved to the bottom of the pile. And let’s face it, you might find yourself doing the same to one of your own clients in a similar situation.
January is a crazy month at the gym. It’s no surprise that just about everyone makes fitness one of his or her top resolutions every year. February is not so crazy though. What happened? Well, like most goals, they go by the way side and after the initial excitement has worn off, we settle back into our normal pre-new year ways.
Resolutions and strategic changes for your business are no different. They are exciting initially, but once that wears off you are left wondering why you ever decided to do this in the first place. What’s more, you cheat one day and skip the desired activity. Then you skip another day. Before you know it, it’s the end of the year and you cannot even remember what it was you set out to do because it has been so long since you have even done it.
Running a business is not easy. No one ever said it was. However, some people have found a way to make it look so easy to be successful over and over again. While that doesn’t mean it was actually easy, it is intriguing to think about what they did so differently that made their businesses stand out.
I’m almost done with the Steve Jobs biography and can say with confidence that it will go down in my history as one of the greatest books I have ever read. His is a story of one such person that found a way to be successful at all levels of business, almost all of the time....
Successful businesses do well because of their amazing teams, not their products and services. Many of us will probably agree that people and teams are the most valuable asset any business possesses and also your most critical competitive advantage. Ultimately, ideas can be copied, modified, and upgraded. However, it is difficult to copy teams and/or steal them (well, most of the time). Furthermore, a well-functioning team is more productive and efficient and thus delivers more value and output for the same money. However, this is all a moot point if you are not unleashing the power of your team. If your team is not producing and performing at its best, you are not enjoying these benefits and are susceptible to competition.
As a business leader, you are constantly faced with decisions. Do I hire her or not? Should I let go of him or not? Do I invest in a new product? The list goes on and on regarding decisions business leaders have to make. However, as it turns out, business leaders have a pretty bad track record of decision-making. In fact, according to Chip and Dan Heath, over 80% of merger and acquisition decisions, some of the most important in business, end up as bad decisions.
For most of the last century, businesses have focused on building their product or service. They have focused on the “thing” that they wanted to sell. Developing that product meant, ensuring the cost was as low as could be and the price was as high as the market could bear thus producing the most desirable profits on a per “thing” basis. The challenge with this model is that when that “thing” is no longer desired or needed, neither is your business (unless it quickly develops the next popular thing). Over the last decade, companies have started to think more about design for a variety of reasons.
For most of the last century, businesses have focused on building their product or service. They have focused on the “thing” that they wanted to sell. Developing that product meant, ensuring the cost was as low as could be and the price was as high as the market could bear thus producing the most desirable profits on a per “thing” basis...
It seems at first glance that a small business simply can’t get the same deals as a large company. After all, large companies have so much more volume to offer their suppliers and as such, deserve better deals, right? Well, maybe not. Consider the following story...
Sometimes we just don’t know what we don’t know. I’m not sure who said that, but makes sense, right? When it comes to our businesses, we cannot always know everything going on. We do not have every piece of information available to us. We cannot be good at everything our business’s need us to be good at.
When it comes to expense reduction, the customer is not always right. Sometimes the customer doesn't know there is a problem. Consider just some of the long-term service contracts a business might currently be committed to: telephone, internet, waste mgmt, payroll/tax service, merchant transactions, internet hosting, etc. When was the last time your business shopped around for a better deal before renewing with the current provider?
Print costs are often an elusive expense that is difficult to track down effectively and reduce. Consider how many people in your organization have a printer? Consider all of the projects that are printed at centrally located printers? Consider all of the paper purchased? Consider all other print not commonly associated with print costs including: direct mail, publications, training manuals, HR materials, brochures, etc.
The ability to reduce costs is as important as the ability to increase sales. CCR provides the practical, long-term solution for reducing the outlay for regularly purchased goods and services.
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