To charge up a sluggish business, several factors should be given consideration. One of these factors is how you can change your business culture so that you reduce your business expenses and improve cost management.
Cost management is simply the efficient financial control of your business expenditure. It’s usually something that is driven by the business owner or accountant responsible for the financial outcomes of the business. However, business coaches like David Guest in Melbourne are using an inverse strategy so that your team members become the people who are driving cost management in the business.
With some simple changes in the way you ask your team to be responsible or accountable for outcomes you can have a business wide cost management strategy that looks after itself.
Start by inviting your team to contribute some ideas on recycling in the business. This approach has a hidden positive in that it engages your team in ‘green’ activities that are good for your bottom line and for the environment & community.
Ask team members to come up with Key Performance Indicators (KPIs) that can be added to their employment review that are aligned to waste minimization in the tasks they perform as part of their job. These may be simple things like fewer photocopies per month or trimming a molding so that less scrap is created.
Engage leaders from within your business to find and redesign processes in your business so that they become more efficient and eliminate unnecessary steps that waste time and money.
Education, training and new equipment whilst require an initial outlay can be a positive way to introduce radical behavioral and attitude changes in your business in a short amount of time. With new equipment in particular, you will get greater efficiencies in production once people are familiar with using it; often resulting in greater cost savings in energy bills, time taken to manufacture, quantity produced in the same amount of time. Knowledge from training and education can have a profound impact on a business over time and when your team is empowered to be responsible for cost management they can bring about cascading improvements.
Reward the achievers in your team who are performing well and positively contributing to your cost management tactics. All to often it’s easy to focus on those who don’t bother; when you do this you’re discouraging the people who take action. The best way to get universal compliance is to focus on your team members who are doing what you want and praise them, reward them with your attention and involve them even more.
If you’re really dedicated to the cause, then also consider removing unproductive parts of your business that just can’t be improved. Sometimes it’s better to let someone else have the headache of an expensive, resource hungry and hugely wasteful process. That way you can negotiate a price and service level agreements that fit with your cost management strategy and get rid of the variable expenditure and costs you have within your business.
At the end of the day you must verify where the money is spent, what money is spent and why it is spent in order to reduce costs and meet the business’ financial plans and budgets. By doing so, you and your team will know the manner in which money is spent beforehand and will be able to find the cost reductions.
Running a business is easy as long as you know the fundamentals of how to manage it. Your costs, cashflow and team are vital to the success of your business and getting the combination right can be a challenge. If you need help, then call out for it and get yourself a business coach or a business mentor who has had success in business. With proper support from a knowledgeable person you can avoid becoming a business failure statistic.