Regularly reviewing inventory is an important step in recognizing when a product or service isn't selling. If this happens, consider shifting your investment to products and services that are more likely to sell.
Remember that the manufacturing, marketing and sales of each product or service comes at a significant cost. You want these costs to be worthwhile.
One step you can take to reduce the inventory volume of an unpopular product is to sell it at a discount. Eventually, you can stop producing or acquiring more units of the product. Inventory isn't only the pricey purchase for owners of brick-and-mortar businesses. The space you use to conduct business can also eat into your budget. If your current office exceeds your capacity needs, relocate to a smaller space with lower rent.
If you don't need to interact with customers or clients in person, you can even move to a co-working space or home office. Don't forget to factor utility expenses into your facilities budget and look for opportunities to save.
Reducing energy consumption can be as simple as turning off lights or equipment when not in use. From purchasing equipment to traveling to client sites, some expenses are unavoidable in business. Fortunately, many of these business expenses can be deducted at tax time to reduce the net cost burden you incur during each year of business. This allows you to control costs in your company without having to slash essential expenditures.
Deducting business expenses is easy if you maintain adequate records of your spending. For example, claiming the mileage deduction can be as simple as enlisting a mileage tracking app like MileIQ to record your mileage. Because tax reforms are often mind-numbing and confusing, here's a look at the most impactful tax and standard deduction changes from the tax reform bill of and how they could affect your bottom line.
While you can usually survive approach for a while, when sales slow or the off-peak season arrives, it can spell trouble. Virtually anything can be reported on with the right platform, from trends within your target audience to the effectiveness of a marketing campaign.
During periods of growth, you should pay special attention to the numbers regarding cost-over-budget, losses, year-to-date totals and so on. This way, you can use the information to predict the fiscal trends of the near future in order to properly prepare, for example saving more during times of high revenue or even increased spending.
This can help leaders tackle any costs that crop up head on. Luckily, there is technology available that allows business personnel to look at the live figures — ones that change automatically after any transaction. The following kinds of reductions are most common:. Combine activities like training days and celebrations into single events. Combine events across multiple departments. Cross-schedule the use of outside resources, such as facilities or trainers.
Combine activities like training days and celebrations into single events, and cross-schedule the use of outside resources. All administrative departments, efficient ones included, have unresolved personnel issues. After you have exhausted the common ploy of claiming cost savings by leaving vacant positions unfilled, you should restructure the jobs of any less-than-fully-busy people and confront the problem of underperformers. The first is usually easy to spot: These workers spend the most time in the halls.
They organize the office birthday parties. Perhaps their jobs were made simpler by the new online HR or finance system a year ago, and new duties were never assigned. The second type includes employees who do both unpleasant but valuable tasks and pleasant but less valuable ones. Any efficiency gains in the former part of their job tend to get offset by excessive focus on the latter.
Such was the case for branch officers at a bank we worked with a few years ago. The company had spent millions of dollars making the sales process more efficient, yet sales did not grow.
We discovered that the officers devoted their freed-up time to better serving existing customers and reading up on new products—but not to phoning customers and selling which they enjoyed least. Every department seems to have one or two of them. Admit it: You already know who these people are. In two more years, you may not be able to protect them any longer. They will be two years older, which may make it harder for them to get comparable positions elsewhere.
But you can find ways around those barriers. Because the job requirements were new, past HR ratings did not matter. He created a process to ensure that the people best qualified for the new jobs got them; the others were released. Determine which parts of your department are performing essentially the same tasks they were a year ago. At one bank, we found that oversupervising the tellers actually cost the organization doubly: It had to compensate the managers and pay for the lost time that tellers spent discussing with their bosses matters that could have been handled independently.
But to gain value from this reduction, you must increase the individual contributions required of the supervisors. Organizations and departments trying to cut administrative costs often leave management untouched—missing out on big potential savings. This makes for narrow spans of control, especially when subordinates are doing distinct, specialized tasks. After that, the savings potential is simple math:.
Click here for a larger image of the graphic. Its spiritual cousin—a riding lawn mower named Typewriter—was found in the maintenance department. Though this idea seems obvious, it is usually overlooked. Check with HR to see where your employees stand relative to the marketplace. Now is the time to repropose those ideas. Strive to eliminate any work for which the cost exceeds the value—keeping in mind that it surely has some value.
You should strive to eliminate any work for which the cost exceeds the value keeping in mind that it surely has some value and that cutting it will cause a certain amount of discomfort. This will allow you to separate the decision to eliminate tasks from the identity of the individuals who conduct them.
You can then determine which people are best suited for the new jobs. How is the workload of your department shaped by other groups in the organization? Is your role to provide information to them, for example, or to process or store information generated by them? Do their deadlines and requirements exacerbate your workload?
If so, cost has a reasonable chance of exceeding value at the consolidated-organization level , because the department requiring the work does not directly bear the cost. You assume that the counterparty values the work highly enough to justify your efforts, but that may not be the case. Therefore, you should disaggregate your efforts as much as possible—for instance, by geography and product line—and then verify that each part of your effort is justified.
This approach can reveal several kinds of opportunities, such as:. Multiple studies have shown that this assumption is often wrong. Coordinators were valuable to departments whose operations were spread around the country but less so to those nearby. Do you prepare long reports with comprehensive data when only exceptions matter or when the true consequences of variances are quite small?
Do you prepare reports that cover short periods of time or are delivered in real time, when longer periods or slower reporting would meet the need just as well? Often, internal administrative processes become frozen—despite the fact that, over time, they may cease to be efficient or effective. Asking questions in four areas can help you understand whether this has occurred in your department and whether you can cut expenses accordingly:.
How have the business requirements evolved since you last fundamentally redesigned the process? Perhaps the need for certain data has diminished or disappeared altogether.
Where do you use people to process forms or information repetitively, rather than do it electronically, with little or no human intervention? What would it take to do away with the exceptional ones? By redesigning its claim forms and eliminating exceptions that did not matter, the client saved more than half the cost of exceptions. Could you save money by shifting the time of day, week, or month that you undertake certain tasks?
For example, how about doing the work when activity in your department is otherwise slow?
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