How to reduce costs

Cost reduction is one of the most effective, but at the same time, the most difficult ways to improve the company's situation. See what you can gain by deciding on cost cutting and optimizing your business processes.

When to think about cost reductions

You are not satisfied with the results of your company, the profitability of your company is lower than the competition, Increases the pressure to reduce prices, prices for raw materials and materials are growing.

Benefits of cost reduction

Pure profit

Cost reduction is the simplest way to increase profit, each buck saved translates in 100% to increase profit. The same effect requires an increase in sales in the company, on average, several dozens of gold.

Empowering Competition

A low-cost company is more competitive and less sensitive to price or marketing pressures.

Increased customer satisfaction

Reducing costs will allow your company to better meet customer needs. You can share your benefits with customers by lowering prices or improving customer experience.

Possibility to implement development plans and investments

By reducing costs, Accumulate the cash you can spend on your future development.

Ways to reduce costs

Outsourcing

Check whether third-party companies are unable to complete parts of processes in your company at a lower cost. This applies to both standard work (cleaning, security, accounting) and more demanding (employee’s production, IT, sales).

Adjustment of employment until tasks are accomplished

Determine the actual working time necessary to complete the tasks of your employees, and on this basis, determine the staff you really need and then adjust the amount of employment.

Employment market conditions

Regularly monitor the market conditions of employees ' employment. Often workers with similar competencies can be hired at lower costs.

Motivate your employees to performance

Pay more to the most productive employees, and if possible, apply a reward based on your results.

Take the courage to make tough decisions

Decisions to release workers are difficult. However, success in reducing costs requires such decisions to be made, especially in the case of overgrowth of employment or the least efficient employees.

Purchasing Strategy

Constantly search for new suppliers, focus on a limited number of suppliers, build partnership relationships that will pay off better conditions,

Search for suppliers in low production cost countries. Shopping is usually one of the least appreciated areas of business. Take advantage of best market practices:

 

Optimize processes review all key processes in your company for:

The inefficiencies of the resources used, delays and inaccuracies. Find, together with your employees, ways to eliminate the above problems.

Company settings on savings

Your employees are the best source of knowledge about cost reduction opportunities. Encourage them to look for ways to save money and build a culture of continuous business improvement. Reward good ideas and empower your activity and engagement.