When it comes to succeeding in business, reducing your costs can have a big impact. In our latest article we highlight some of the most effective cost cutting methods to consider.
Manufacturing is typically outsourced to countries where production costs have been historically low. However, this isn't always the cheapest option, and there are a number of factors affecting costs that you'll need to consider.
Dealing with offshore manufacturers often means one or more costly visits out there, and there is an inherent lack of control to deal with too, especially if a language barrier exists. This means you won't always have strict control over manufacturing costs.
Staffing costs are actually on the rise in countries like China, and along with exchange rate fluctuations and import costs, you might not be getting the best deal.
In comparison, onshore manufacturing brings with it the advantage of shorter lead times and better flexibility. You'll reduce travel costs as you won't need to travel half way around the world to inspect the factory or meet the operations manager and energy costs can often be lower.
Manufacturers here in the UK are often tooled up sufficiently to take on large capacity jobs, and you'll benefit from having greater control over crucial decisions affecting the manufacturing process. Moving manufacturing onshore is certainly worth considering.
2. Packaging & courier costs
It is well worth comparing couriers and packaging costs regularly to ensure you are getting a good deal. It can be tempting to stick with existing suppliers, but if you are prepared to look around you'll often find better deals and comparable service levels.
Reducing the amount of packaging that you use is good for a couple of reasons. You get to cut your associated costs with relative ease, and you also get to shout about your eco credentials, which will keep customers happy too.
When it comes to your shipping costs, you might find a better deal if you ship larger quantities less frequently. All couriers will offer deals that you won't find freely advertised, and if you are offered a good deal why not go back to your existing courier and see if they'll match it?
3. Finance, accounting & IT
There are several ways that you can cut your IT and accounting costs.
Consider moving to the cloud and using software subscription services, instead of buying expensive packages outright. Cloud services tend to be much more flexible in general, and are more keenly priced, helping you to reduce server and power costs, meaning you are only paying for what you use/need.
Computing power is starting to be seen as just another utility, similar to electricity and gas. This clearly over-simplifies the service, however paying for what you use to something that we are all used to in everyday life already.
Consider your IT department. Could your needs be handled just as effectively, but more cheaply, by outsourcing?
You can also use cost-effective tools like MyExpensesOnline that help your business to keep track of costs, such as staff expenses.
4. Human resources
If you don't already, then you may want to use a HR advice service to ensure your business is up to date with recent changes in HR law. They will be able to help you to avoid any unnecessary future costs arising from staff recruitment and management issues.
Regarding recruitment, you might want to consider eliminating agency fees by recruiting direct through the many job sites and and social media channels available. Alternatively, you might want to consider using a different recruitment agency with lower fees.
5. Professional fees
Accurate record keeping can help you to reduce your accountancy costs, and can help to ensure you are able to claim back everything you are entitled to. You might also consider using cloud based services to help reduce fees