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The Flevy Blog covers Business Strategies, Business Theories, & Business Stories.
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Editor's Note: Take a look at our featured best practice, Cost Reduction Opportunities (across Value Chain) (24-slide PowerPoint presentation). Though there are multiple levers to maximizing an organization's profitability, costs are the most directly controllable by any organization. Profitability is being challenged by increased costs, stagnated revenue growth, and increased capital costs in today's economic climate. Therefore, a [read more]
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Reducing costs has always been a priority for businesses. However, in the current Covid-19 stricken times, cutting down on expenses has become essential than ever. There are several reasons for that. During the pandemic, most businesses had to abandon their brick and mortar shops, and rely entirely on their online shopping options.
It has intensified the competition a lot, and many organizations are struggling to stay afloat. Several large brands, such as Pier 1 imports, Dressbarn, and several others, had to file for bankruptcy, sell their businesses, or both. In such times, keeping the costs down to the bare minimum can make the difference between success and failure for most companies.
This article is directed towards business owners who want to reduce their costs but are struggling to achieve it. We are going to discuss five hacks that can prove efficient in cutting down the expenses substantially.
Salaries and wages usually form the largest chunk of expenses second to the cost of raw materials. Businesses that still rely on manual methods of attendance and wage calculation may be shelling out more on their employees than they should be. In the present era, any business without an employee time tracking software does not have the means of controlling their labor costs.
Many business owners do not realize that when they have a manual time tracking system, their business is exposed to time theft. Their employees steal time by taking too many breaks, extending their break time, and punching other employees in and out when they are not present.
Using employee time tracking software can help your business cut down these unnecessary expenses by ensuring that employees clock in and out in time. Employees cannot “buddy punch” their friends who are absent either when they have to use software to clock in and out.
The software can help you to monitor each employee’s productivity and control those who are not putting their best efforts. Employee time tracking software will also help your company reduce the cost of hiring a payroll clerk since the software will cost a fraction of their salaries.
Since every industry needs to have an online presence these days, employees can complete a large chunk of the job from their homes or any other remote location. Allowing your employees to work from home can reduce your employee-related expenses further, provided your company can operate that way.
You will be able to save on rent and utilities of your office premises, nor would you have to pay for the cleaning and maintenance of those premises. Your company will be able to save on any expenses that it incurred to provide food or refreshments to the employees. Since your staff members would not have to travel every day, you will notice an increase in their productivity as well.
Technology can not only help your company to keep track of your employees, but it can take care of several aspects of your business and help you to reduce the costs. Using technological solutions can also increase your company’s productivity, which you can channelize into generating more revenue. These are some of the technologies that your company can use to cut down its expenses.
As a business owner, look for free apps that you can use for the benefit of your business. It will help you to reduce your costs while finding ways to increase your revenue.
In present times, businesses all over the world are considering options to outsource parts of their operations. Outsourcing reduces several costs for a business, such as salaries for specialists, equipment costs, revenue loss due to delays, so on and so forth. Companies can also improve their productivity with outsourcing because they can tap into a pool of better talents outside the company.
Since businesses need to cut down on costs, they should limit their expenses for paid advertising and use other means that are free to use. Some of these are:
A penny saved is a penny earned. The COVID-19 pandemic has reminded businesses of this age-old saying. If you have been struggling to limit your company’s expenses so far, you can use the hacks mentioned above. They can not only reduce the costs but also help your company to increase productivity.
You can download in-depth presentations on Cost Reduction and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
For even more best practices available on Flevy, have a look at our top 100 lists:
These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.
