Find Ways to Reduce Costs
One of dozens of strategies listed and linked to here:
How to Make More Money
From Your Business
By Steve Gillman
There are almost always safe ways to reduce costs in any business.
By safe, I mean ways that do not risk a loss of customers. After
all, you could stop heating your coffee shop to save money, but
you wouldn't likely see more profits in the future. But if you
do find ways to reduce costs without damaging your business,
the result is often pure profit. If a baker finds a supplier
that will provide his flour for $1,000 less per year, he just
added $1,000 to his annual profits.
There are two other pages in this section which address ways
to save money and so increase profits. They are:
Find Ways to Reduce Labor
Costs - Firing people is not the only way to do this.
Reduce Overhead Costs -
This saves money, and makes your business more secure as well.
Let's look at other ways to reduce costs, starting with an
example from when I worked at a fast food restaurant over 25
years ago. As an assistant manager I was responsible for placing
the orders for food and supplies (cups, cleaning stuff, etc).
When I first started doing this I was amazed at how many thousands
of dollars we spent on sauce packets, which included mayonnaise,
ketchup and about three or four other types. I started watching
to see how many of these the employees were handing out at the
drive-through window with each order.
The employees were typically putting a handful of packets
in each customer's bag, and I was sure that most of these condiment
packets were just thrown away. I decided that it was time for
a new policy, so I informed the employees that they were to ask
each customer if they wanted the packets, and then do one of
two things. They could specifically ask how many ketchup, mustard
or sauce packets were needed, or they could let the customer
see them putting a couple in the bag, so the customer could ask
for more if desired.
Since everyone who ordered got just what they wanted, I had
no complaints from customers. We definitely had fewer packets
going out that window. I tracked the results and soon discovered
that the new policy was saving the restaurant about $2,000 annually,
which meant that the owners had $2,000 more in profits from that
one change.
Every business is unique, but as I said at the start of this
page, there are almost always some ways to reduce costs. For
example, in many businesses you can ask suppliers if there is
a way to cut the cost, and some of them might have suggestions
that work for you both. Perhaps by delivering bigger quantities
but less often a supplier can save money and pass some of those
those savings on to you. Or, if you know of other companies that
buy the same supplies as you, you might be able to pool your
purchases to get bulk discounts.
You can save money on advertising by including some of it
with other mailings, like your invoices. You could perhaps put
coupons in with your products to encourage repeat business--at
a much lower cost than putting them in the local newspaper.
To be more systematic about this, list everything that you
spend money on for your business. Even the toilet paper in your
public restroom should be included if you have a retail business.
Once you have your list, consider each item and brainstorm any
possible ways you can spend less for that. Note the workable
ideas and act on them or delegate them to employees.
Looking for ways to reduce costs like this is obvious, but
how often have you actually made a list and brainstormed ideas?
Get started. Those savings you find are profits waiting to be
harvested.
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