For most entrepreneurs, reducing business costs is about saving more than just small change. It is imperative, as reducing cost is essential for any business to survive.
If you own a business, you may be already spending time reading bestselling books and online tutorials to learn the secrets of creating a business model that reduces costs by cutting down unnecessary spending. This is because almost every entrepreneur or business owner wants to increase the efficiency of their business by cutting costs.
But is it enough?
I have learnt some of the ways, through research and development, which have helped me cut a lot of working capital costs. It was surprising that some of the ways were right in front of me.
Below are some of the ways that have helped me and hopefully will help you too:
Begin With Hidden Asset(S)
Employees bring any business owner’s vision to reality. You invest both time and money into hiring and training your employees along with many hours of supervision. Therefore, you should ensure that you make the most of this investment.
One good way to cut costs is getting them to help you. Once you are ready, as the leader/owner of your company, there are several ways of achieving your desired cost-reduction goal. You can pressurise your employees to comply by implementing strict rules and imposing difficult benchmarks. Or, instead, you can provide respect to your team and give a developing base to long-term change by creating and getting back powerful results from these crucial players.
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Be Honest With Your Employees
To eliminate the chances of working capital waste, you will require changes. Change is essential to an organisations survival, but it does not mean that it can be easily implemented. This is where getting your employees to buy into your philosophy becomes crucial.
Having a clear line of communication with your employees is the initial step to encourage enthusiasm with the new changes.
Clarify how exactly you feel that there should be a reduction in expenses. Also make it clear that any upcoming changes are for the betterment of the company, not to criticise the traditional or old work methods or to threaten the available job profiles. Use your visionary skills to paint a bigger and clearer picture of where the changes brought in will gradually take your employees and your business in the future.
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Track Business Expenditure Data And Even Share It
Find out which areas of your business have a higher level of capital wastage. The time gap between smaller steps in a comparably larger work process is considered to be a huge detriment to the system’s productivity. Depending on the niche or industry that your business belongs to, areas to keep a tab on include inventory, production, supplies, and transportation.
To stay ahead, create reports and share the specific information that you find and are looking to improve. Such visual data will assist you in reaching your business cost-reduction goals.
This data can also be helpful in sorting out any disagreements with your employees. A simplistic summary report could be the facts-based backup you require to make things clear to an unsettled employee. Don’t be under the impression that your employees understand the information as much as you do, but be open to training them to interpret results.
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Define Your Employees’ Roles
Once you have clear, data-driven objectives, determine who the right person is to play specific roles. Assigning the right employee the right role will not only ensure the optimum usage of that individual employee but will also improve performance in the required areas. Employees should be familiar with their profiles and understand the exact role they play in reducing costs for their company.
Every member of your team can have unique talents and skills to contribute. Figure out how you can engage them. While it is imperative that you bring in the conversation, take note that your employees may have a better understanding of what they can achieve in their department to fulfil the new requirements.
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Accountability is the Key
A philosophy change can only take place when all the members of a team feel accountable. Make sure to create a culture of accountability with the help of regularly-scheduled meetings with a purpose of checking-in on the shared cost-cutting goals.
Prior to adjourning the meeting, ask your employees to write down immediate tasks that they want to complete and make them report on it at the next one. These tasks will ultimately push the entire team towards a greater mission. Do not forget to add an element of fun and creativity to your work-project. Whether it’s a single unit or department, have a progress board hanging in your workspace. Track the improvements on it as a team or have them compete with one another to reach the finish line.
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Present the Right Tools
Find out what tools your employees need to minimise time wastage, resources or materials. It is never too late to figure that out. Here is a simple and easy way to get started: have a communication platform in a place that allows all the team members to communicate with each other, enabling them to share ideas or request information, as required.
Online messaging or project management platforms, are common and well-liked across multiple industries. In addition, consider conferences and training programs made to boost employees’ skills. Such career-building opportunities can be enticing to employees and can work in favour of your company in the long run.
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Be the Change To See the Change
Entrepreneurs are well aware of the fact that success can take a trial and error route. Even if you fail at cost-reduction, do not be dejected. Unexpected turns along the journey for change may result in your team exploring new and smarter ways to eliminate wastage. Even if you are not able to cut costs initially and are in need for funds, look for options to deal with it positively.
Businesses always have an option of going for commercial funds provided by alternate business fund providers. These can help a business undergoing a financially tight situation and can provide them a base to rebuild their revenue generation system while recalculating cost-reduction moves.
The moral of the story is to get into it with a positive attitude and plan your future steps. Your adaptability and modesty will speak volumes to your employees as you tackle serious issues such as cash flow problems in your business with ease.
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Celebrate Progress
“A journey of a thousand miles begins with a single step”. This proverb is true for every goal in life including business cost-reduction goals. Even the strongest leaders with a highly driven organisation know that if you do not celebrate small wins, team members can face burnout in the process. So, break down goals into manageable bits and celebrate when these smaller yet significant milestones are reached.
Even smaller gestures, like recognition at your next staff meeting or an unplanned mid-morning coffee can enhance employees’ morale and provide you with added momentum. Implement the above tips to maintain the philosophy that you have worked hard to gain and, in addition to saving money, you will have a team willing to follow your lead.
