8 Ways To Reduce Costs In Your Business
If your business is looking to increase profitability for survival, to free-up resources to invest in new products, or to pay bigger bonuses, cost reduction is a powerful way of doing this.
But how do you go about reducing your costs in the first place and getting those savings to stick?
Businesses can spend up to 70% of their revenue on goods and services bought from 3rd party suppliers, so-called “bought-in” goods and services.
For some businesses though, effective purchasing or procurement is an afterthought, meaning that costs are not controlled and managed properly. This can expose the business to profitability risk, among other things.
Think about that. If your business is spending up to 70% of its revenue without having any effective management or control of that spend in place, it could be haemorrhaging money…and profit!
Cost management, cost control and cost reduction are an essential part of running a successful business and ideally should be handled by a dedicated team of procurement professionals.
But if your business doesn’t have such a team, all is not lost.
I’m going to give you the 8 x cost reduction levers in this blog that work on the demand-side of your bought-in purchases.
Demand-side in this context means what you buy, how you buy and when you buy. The great news is that YOU have complete control over this.
For a detailed explanation, including how to ensure your business is ready for cost reduction and pitfalls to avoid, please see my “Ultimate guide to practical cost reduction”.
To summarise, all these cost reduction levers are totally within your control.
Deploying some or all of these 8 levers will secure meaningful and sustainable cost reduction, increasing the profitability of your business, and elevating your profile in the process.
If you’d like to benefit from your team understanding the levers and how to apply them in practice, see my cost reduction course for what you’ll learn.