• Benchmark against your industry
Benchmarking is the process of gauging the performance of your business against a competitor in the same market. Carrying out benchmarking lets you understand the performance of your business and its potential. You need to establish metrics meaningful to your business and comparable to the metrics used by your competitors. If you find the expense is high in certain categories, drill down. Investigate the reasons for this high spending and cut the costs to the industry customs. Spancom technologies can assist you in the process.
• Manage variable costs
Analyze your company’s past variable expenses and assess what percentage of sales they represent. Historic percentages are both good indicators of potential future costs and a benchmark to use in keeping those costs in line with selling activity.
• Get tough on fixed costs
Business owners often become complacent when it comes to fixed costs as they are recurring costs and reflect the long standing relationships with suppliers. However, you need to periodically test the market to know if you can get a better deal from competing suppliers. Spancom technologies recommend you to get two or three quotes regularly. You can send out a message that you’re monitoring your costs by putting out a request for a proposal or a less formal method.
• Invest in technology
In this age of digital transformation, it’s imperative to invest properly in the latest technologies. Find out new technologies that may help your business to improve efficiency, increase productivity and minimize costs.
• Offer incentives to staff
Entrepreneurs must make the people within their organization accountable for costs. It’s recommended to set proper rewards for employees who find viable methods to minimize your company’s expenses. This kind of approach creates a zero water culture within the organization. It also inspires the employees to implement cost reduction initiatives to stay on task and be creative.
