5 Ways to Reduce Expenditures in your Business

Strategy Plan One 

January 31, 2012 

 

Tough economic times require tough business and financial management measures.  In some cases with declining revenues, there is a need to balance the budgets by reducing costs.  Here are some ways to potentially assist in this balancing act:

 

Contracted services

In describing contracting out as a cost saving measure, there are obvious sensitivities and considerations in maintaining employment levels first.  Your employees are valued individuals.   However, instead of running up new staffing costs or continuing to support more staff than your organization needs, consider the benefits of contracting.  Contracting offers flexibilities in scope of work, deliverables, cost and timing.  Most contracts provide the ability for a manager to flick the switch on and off when services are needed.  You will have a defined cost attached to each piece of work, and unnecessary overhead costs can be reduced.

 

Flexible Work Arrangements

If you can maintain service levels it may be in your best interest to provide options to employees such as flexible working arrangements from home.  This could reduce office overhead as office space would not be needed.  Virtual assistants are popping up all over the place as viable alternatives, and in today’s age of connectedness, there is sometimes no need to be at a physical location.  Management from afar is sometimes challenging, but performance, quality and quantity of work can still be tracked.

 

Reduction of Fleet Vehicles

Depending on what business and industry you are in, you should probably review the unnecessary costs associated with maintaining a fleet of vehicles for operations.  It also depends on how frequently your employees travel.  It may make sense to move to a Personal Motor Vehicle (PMV) allowance, based on a set rate for usage (usually $0.XX per mile).

 

Partnerships

Depending on the partnership arrangements, a whole list of savings can be realized, from sharing of internal staffing resources, to marketing costs, to utilization of partner resources completely.  Do not overlook partnerships as a valuable cost saving measure.

 

RFP Processes

Request for Proposal (RFP) processes in any business should be considered as an essential procedure for the procurement of any goods and services for the business.  RFP processes allow you to define the scope of work and allow you to send out requests to suppliers to competitively bid on that scope of work.  Ensure you also develop an RFP assessment, ranking score card that may rank bids based on cost, experience, track record, timing, and added benefits.  If you need to find a low-cost provider to reduce expenditures, this may be the process for you.

 

Carefully review your processes and procedures to maximize value, while trying to maintain balance in your budgets.  Whenever possible seek the advice of a qualified professional for financial management.

Strategy Plan One

© Strategy Plan One 2012

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