The business landscape at present is something of a hostile one, as imminent recession – on top of a tough year for borrowing – threatens to push businesses into cost-saving measures. All businesses should be striving, one way or another, to maximise their profit margins and improve value for themselves and for their investors. But the coming challenges make cutting costs more important than ever. What are some key ways you can engage with costs as a business, to improve both your cash flow and your long-term prospects?

Budgeting

Naturally, one of the more direct ways that you can reduce your business’ costs is through budgeting. Your business will already have some form of working budget in place, but if you are experiencing a haemorrhaging of funds as a business then this could be a strong clue that something needs re-tooling.

A great way to develop your existing business’ budget could be to sub-divide it by department and location. Having a more nuanced approach to managing expenditures can help you isolate any potential sources for over-expenditure, or otherwise tighten up spending so as to free up more funds on a company-wide basis.

Reducing Fixed Costs

Many businesses preoccupy themselves with attempting to cut down on costs that tend towards the variable; that is, to address shifting costs of supplies and services by renegotiating contracts or starting new professional relationships. However, there are also meaningful ways in which you can address fixed costs, for example, energy overheads at each business location. Additionally, business energy comparison can be a strategy to help you identify better deals and optimize your energy costs.

Using energy as an example, a simple re-investment of income on insulation can improve the energy efficiency of your locations, reducing your overall spend on energy for that location. You might also invest in solar panels for your locations, to offset some energy overheads altogether – and even generate some income by selling excess energy back to the national grid.

Employee Development

Often, reducing costs involves initial expenditure in certain key areas – i.e.: spending money to make money. But your employees, and the way in which you build up your team, can be an opportunity to develop for both short- and long-term cost-reduction.

Highly-skilled workers are expensive to onboard and expensive to keep on board, even if their results speak for themselves. If you already have talent within your business, though, it can make more sense to ‘hire low’ and train keen workers up.

Outsourcing and Freelancers

Finally, it is important to acknowledge the heavy cost that a comfortable staff cohort can exact on a business, particularly in times of economic trouble. Where tasks need doing but the coffers cannot justify the taking-on of another hire, outsourcing can be extremely useful. Talented workers can be brought in freelance, too, circumventing the costs associated with onboarding and PAYE while guaranteeing your agility as a business.

Guest Writer