Manage your business costs

Making it cheaper to run a business can prolong your company’s life; here are some tips to managing your business costs.

By Craig Falck for Africa Report
Photograph: © Farang | Dreamstime.com

It costs money to make money. The thing is, you don’t need to spend an arm and a leg to be a successful business owner. If you manage your business costs correctly, you could save yourself a lot of time, money and hassle. But where do you start?

To manage your costs, you need to control them. And to do this, you need to have 100 percent knowledge about the costs as well as training in cost control. It might sound silly, but the more you know about your costs the better. Don’t just accept “sundry costs” on the list; find out what all went into these sundry costs. By knowing these sorts of details, you can keep an eye on costs and will be alerted by anything odd that pops up.

You should also shop around for products. While the first or second supplier you speak to may offer an amazing deal, you need to do more research and look at other suppliers. Even better, if you can cut out the middleman and go straight to the source, you might save your business a truckload of money. And 9 times out of 10, the sources are more than happy to sell to you directly.

While you aim to provide the best quality service or product to your customers, you don’t need to go into overkill. For example, if a client asks for an aluminium slab that will support 50kg of weight, it’s fine to sell them one that will support up to 100kg as long as it doesn’t cost five times what the 50kg one would. You might find that the grade of aluminium used for a slab that would support 75kg costs half of what the 100kg one would but that you could sell it for the same price and still provide the customer with a superior product. Also, generic items might be an idea to save on production costs, as long as there is no difference in quality between the generic one and a brand name item. You could also charge a slightly lower price than normal and help build up customer loyalty through this. Just make sure that you don’t compromise your business and service or product – that will lose you customers.

Don’t be afraid to cut costs when you can. Instead of using expensive pens in the office just because they’re “fancier”, opt for cheaper ones that work just as well. Instead of buying the most expensive printing paper for documents, rather opt for a slightly lower grade that will save you money and be just as good. You don’t want to skimp and be seen as a cheapskate, but you also don’t need to waste money on items such as stationery.

Managing costs is important for every business, especially in the current global financial situation. It can mean the difference between being successful and making a healthy operating profit or being on the brink of bankruptcy. It’s time to manage your costs properly.