Introduction
Those of us who are entrepreneurs know that possibly what I ask you next sounds like a utopia, since the maelstrom of day to day would make it impossible for you to review these points.
Entrepreneurs tend to focus on doing, to be able to carry out our objective and often at any cost. It is true that when we start and look for new providers we compare costs and qualities between several, we compare the costs of insurance between different companies, the telephone rates and so on with the different items in which we are adding providers.
Another thing that we usually define during the first year (generally through trial and error) is the way in which we will do things, what will be our procedure for hiring, buying, selling, promoting, producing, etc, etc, etc.
But then, once we’re up and running and we’ve figured out the sourcing or the way we do things, we don’t usually spend a lot of energy reviewing whether that’s actually the best way or the cheapest way to do it.
A good practice would be to consider a periodicity to review the efficiency and supply costs and the aforementioned processes. There is no specific time to do it but considering a temporality will help us to effectively carry out said review.
“A good practice would be to consider a periodicity to review the efficiency and costs of supply and processes”
Some ideas to reduce costs
Inventory management:
Efficient stock management allows you to reduce costs both for financing the merchandise and for breakages or waste depending on the products.
Waste control:
Many times we believe that the waste we have is very little, or that we already include it in the cost of the product. But…. Did we ever actually measure them? With something as simple as a waste sheet like the one you can download from this link, you will be able to measure it and find out if it is really what you thought or maybe you will be surprised.
Management of payments and collections:
A good management of payments and collections allows to avoid the costs that are generated by the breach of the contractual conditions of purchase, errors in the payments, omissions of application of discount policies of the suppliers.
Search for secondary markets.
To avoid obsolescence, secondary markets can be sought. There are specialist companies that are dedicated, sector by sector, to analyzing the composition of the materials in your obsolete inventory and helping to find outlets for them in secondary markets: to scrap, for example, or to extract any of its components whenever they may be valuable. in another or other sectors.
Stationery and Administration:
Today it is no longer necessary to keep a physical file of the entire operation of the Company, but it can be kept digitally in the cloud, thus making it easier for all members of the company to access according to their access permissions. .
Recruitment incentives:
When making new hires, always check Contract Bonuses granted by the SEPE (State Public Employment Service) to see if it fits into any of the bonuses/reductions to labor recruitment and aid.
Document processes:
Placing it in a document will allow us to pay attention to how we have been doing things and will force us to rethink if there is not a better way of doing it and evaluate it.
Review and renegotiate contracts with suppliers:
Sometimes it is possible to obtain better terms or prices by reviewing the contracts with the suppliers and renegotiating.
Automate processes:
using technology and automation to perform tasks more efficiently can help reduce costs.
Eliminate unnecessary expenses:
Review the company’s expenses and eliminate those that are not necessary or that are not adding value to the company.
Use energy more efficiently:
Implementing measures to reduce energy consumption, such as using energy-saving lamps or turning off devices when not in use, can help reduce energy costs.
Make more efficient use of space:
If the business is using space inefficiently, it may be able to cut costs by downsizing its facility or moving to a smaller building.
Consider telecommuting:
Allowing some employees to work from home can help reduce costs, such as office rent and energy consumption.
Use outsourcing:
Instead of hiring full-time employees, considering outsourcing some tasks to specialized companies can be a way to reduce costs.
Conclusion
In times of inflation and economic crisis, cost reduction is important because it helps maintain the financial viability of the company, increases its competitiveness, improves its efficiency and prepares it for the future. The current situation can cause a company’s income to decrease and costs to increase, which can jeopardize its viability.
