Small ticket cost cuts add up

Caught in the crunch between tightening credit and increasing energy, transport and material costs, an SME owner's mind turns to … cost cutting! Great idea, but where? Use lower quality materials to cut down inventory cost? Maybe leave out that final inspection before packaging up? Cancel the ad in the Yellow Pages? Fire a couple of employees? Pruning the big ticket items will save on costs right enough, and quickly, but at what long term consequences to the quality, reputation and awareness of your product.

There may be any number of costs lurking in your everyday activities and procedures that just don't get noticed simply because they aren't big ticket items. But that doesn't mean they can't add up to a significant spend nonetheless. Look around and see if these tips can help drive down costs before making any drastic decisions that may come back to haunt you later.

Fuel

Organise your errands so you can take care of several on the one trip
Arrange delivery schedules, sales calls or installations according to the shortest route between them rather than zigzagging across neighbourhoods
If delivery is a courtesy rather than an integral part of your sales process, then consider cutting it out, offering it to only your best customers, scheduling it in late morning or early afternoon when traffic is lightest, or introducing a fee for it

Utilities

Turn off equipment that's not in use - computers, photocopiers, lights, air conditioning
Switch to energy efficient light bulbs
Use high efficiency rated appliances
Install automatic light switches and put the aircon on a time switch
Make use of natural lighting where possible

Office supplies

Put a moratorium on buying all but essential supplies
Reduce printing to essential documents and use the reverse side of paper for copying draughts and internal documents
Use recycled paper
Buy from office warehouse companies or discount stores
Purchase locally - shipping costs from distant distributors can more than double costs

Office equipment

Before buying new furniture check out second hand office supply dealers

Communications

Cut back on unnecessary phone service add-on features like music on hold
Price compare phone service providers
Consider a VoIP solution
Take away mobile phones from employees who don't rely on them to do their job
Price compare website hosting service providers
Consider next afternoon or two- or three-day service instead of express shipments
Use email instead of postage mail whenever possible

Make cost cutting a continuous improvement programme

While you may have been pushed into a cost cutting exercise by the current economic situation it's smart to make cost review a normal and regular part of running the business. Now that you have carried out this review, ensure the process of actively searching for cost cutting opportunities stays alive and keeps contributing to increasing your profitability.

For more information contact your RAN ONE business professionals at
Academy of Business Excellence Limited