Plan Ahead

Cost Control Tips for Your Business

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Author: Marijana

As more and more small businesses are failing each day, companies are trying to develop new strategies in order to stay alive and earn profit. It may be the perfect time to shed a light on some useful small business cost control ideas and the fact that they can mean the difference between success and failure of a business. Most businesses concentrate strictly on increasing sales as a manner of overcoming the financial difficulties and pay little attention to net bottom line which can eventually put the company’s well-being in danger. Great number of business owners neglect the fact that they have some sort of money leakage in their company, and that they can prevent that form happening and save significant amount of money through controlling costs. Introducing a cost control system helps you to save money almost instantly, but it needs to be managed carefully so it doesn’t affect the quality of your business. Basically, cost control should be a part of routine financial management of your company. Whether your company is experiencing a financial downturn, or simply searching for a way to reduce costs to improve profitability, here are some easy-to-execute ways to keep your costs under control and cut unnecessary expenses. Involving your employees in cost control is very important. They can share their ideas on cost savings and also present you with the problems that occur, and let you know what it is that wastes their time the most. Put some effort in explaining the new cost control initiatives to your employees so that you can expect their full co-operation. There are certain costs that can be cut with minimum risk of negatively affecting the quality and performance. Make sure to check supplier invoices for overcharging such as double billing, incorrect charges and missing discounts. Train yourself to eliminate unnecessary costs wherever possible, and cut down overhead expenses by:  Employing energy efficiency practices. Start with switching off the lights or other energy consumers when they are not in use. Controlling the use of office supplies and telephone Using second class postage, email or fax Carrying sufficient insurance coverage to adequately cover risks Negotiating rent or lease contracts if possible Identifying manual, paper-based systems that could be computerized Avoiding frequent small orders that waste time and may lead to losing discounts  Reduce your payroll costs and keep them budgeted and monitored for progress. In this effort, try redesigning the processes; cover only the positions necessary, eliminate duplication of effort and cut out time wasting. When it comes to your employees’ benefits, get quotes from different insurance companies and contract reasonable deductibles and co-payments for health insurance. Think about using the following tips to reduce purchasing costs:  Switch to cheaper suppliers, or negotiate the best possible payment terms. Consolidate purchasing with fewer suppliers to get better discounts. Simplify purchasing procedures to reduce your costs. Send suppliers forecast schedules of purchase needs to avoid backlogs and reduce delivery time.  Make production more efficient by:  Reducing your product range and increasing production runs. Using standard components to lower design, purchasing and manufacturing costs. Changing processes to conserve raw materials and energy. Improving quality control to cut reworking costs.  Cut communication costs by:  Using email whenever possible. Using the corporate intranet to reduce duplication of information and unnecessary meetings. Using cheaper telecoms facilities

Article Source: http://www.articlesbase.com/small-business-articles/cost-control-tips-for-your-busines-1700519.html

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