At least every CEO is grappling with the challenge of keeping costs as low as possible. Saving money is one of the major priorities of at least every company that seeks to remain in business in the long run. In the business world, for you to make money, you need to spend money. But if you put a lot of emphasis on rapid expansion of the company at the expense of conversion, you may end being distracted from making wise decisions that will be helpful to the company’s financial health. The following are some of the means that a company can employ to save money:
Optimize the company’s Expenses
Optimization of expenses will assist the company spot out inefficiencies in its operations and identify partners that can help save a lot of money in the form of focus, time and opportunity cost. Additionally, you should also keep your budget into limits; track all the company’s expenses so as to keep the company in line with its short term and long-term goals. Keep a monthly tally of how much has been spent on each expense. This will help you identify areas with problems and streamline your spending patterns to fit your budget. Although everyone needs to track all major expenses within the company, the level of attention devoted to small expenses increases with the seriousness of the company’s financial position.
Develop an ownership culture among employees
This is one of the most effective ways of saving the company’s money. When employees are recognized and feel part of the company, they will always think and do what is in the best interest of the company. They will be motivated to work hard hence increasing the company’s productivity, they will adopt saving practices like sharing. When I ran my company one of my employees decided on her own to research how we could save more on our companies car’s, so she looked at the big three insurance agencies Allstate, Farmers, and InsuranceQuotes to price compare and ended up saving the company thousands of dollars a year. When employees feel empowered and trusted, they become motivated and own up their work.
Go for bundled services
Some service providers offer their services in bundles. These include Internet, web hosting, fax, cable and phone services. Sourcing for bundled services from the same service provider can help a company save large amount of money every year. This method can work for companies in different ways. The bottom line is to always identify elements with the maximum expenditure and try to reduce as much as possible. In the same line, it is advisable to buy goods and services in large quantities. This enables a company to benefit from economies of scale as well as avoid duplication.
Cut salaries and benefits to existing and new employees.
In many companies, salaries and benefits constitute the largest expenses. It may be hard to convince employees to take a pay cut hence the process should be gradual and start with existing employees. Many companies always introduce this program of wage cutting with new employees which is ill-informed.
By slashing the amount, you spend on employees, it means you are not getting the right talents and skills from your employees. Cutting salaries for new employees equally means the company will attract low skills and talents in the future. To harmoniously solve the stalemate, a company can develop a new salary structure that is based on output. This will propel employees to work more so that they earn more.
Sharing working resources
A company should create a working environment and culture that encourage sharing and exchange of resources. This starts with office layout. An open office layout is known to be good at encouraging workers to share office stationery. This is much cheaper than each employee having his or her own stationary. In the same line, companies can share temporary workers and physical resources.
Business and companies are different in many ways. Different solutions apply to different types of companies. A multinational company that require a lot of travelling may for instance find it hard to limit its travel expenses compared to a localized company with a single or few branches. What is however true that is every company has at least an element with financial fat that needs to be trimmed.