Increased profit margins are achieved by focusing on what and how much you sell, but also through concentrating on what you spend your money on. In the words of business coach Simon Monaghan, “There are only three ways to increase [your] profits. You can sell more, increase margins or cut costs.”
Reviewing where your budget is spent can result in substantial savings for your business, subsequently allowing you to achieve higher profits; however, reviewing and cutting operational costs is often side-lined by established organisations due to the convenience of following the established procedures.
Organisations need to begin with assessing their business models in order to reduce their operational costs, and whilst this may seem like a big project, established organisations may be surprised how much money is wasted through following outdated business practices.
Technology
Technology is radically changing business operations, from allowing businesses to move from paper-based systems to the automation of repetitive admin tasks; technology has the capabilities to streamline the processes of organisations and radically reduce their operational costs. When considering your operations, ask yourself if your business is utilising all the cost-effective software available on the market that could help to improve the business’ efficiency and bottom lines dramatically. Also, make sure to keep track of the latest technological advancements to ensure you are receiving the best reductions in operational costs.
Suppliers and Outsourcing
Once looking at your internal costs, the next stage is to look at your external costs including suppliers. Often, organisations will continue with the same suppliers because of convenience; however, this approach could mean your business is spending too much on the products, services or materials you require from external companies.
From regular reviews, you can identify the pros and cons of your current suppliers to identify if moving to an alternative company could achieve better rates and services. For this reason, employing expert business to business consulting companies can help ensure reviews are comprehensive and the best suppliers and packages for your organisation are selected.
Within these professional reviews, procurement companies can also identify functions that would be more cost-effective if they were outsourced. They will identify and review thousands of options to outline the best options for your requirements.
Energy Usage
Working to low carbon schemes is one of the biggest ways companies can reduce their operational costs. Not only can renewable energy sources dramatically decrease energy bills, but it can provide a host of other benefits including demonstrating corporate social responsibility.
To discuss more ways your organisation can save money on its operational costs, get in touch with our experts today. We work alongside you to identify the key areas where you can make significant savings and offer cost-effective solutions to improve the efficiency of your business.