Improving your Business Efficiency and Cost Management
Do you consistently find yourself in a position where you’re overwhelmed with that is going on in your business?
We have found that many businesses find themselves in such situations because they are so busy running the business and don’t have the tools to improve efficiency.
The million-dollar question we get asked is how do we declutter and become more efficient?
We will be going through 2 key pointers to help with this.
- Evaluating your cost management system and establishing processes
- Improving efficiency
What is Cost Management?
This is the process of estimating, allocating and controlling all the costs you are going incur in any project that you take on. It is the entire life cycle of the project and managing its cost effectively can ultimately make a profit for your business.
Establishing your fixed costs:
To be a successful business, it is vital to establish what your fixed costs are (for example rent). This will help in your next steps in terms of planning and projecting your budget for the year.
Working on your budget:
Budgeting is a core principal in ensuring success in your business. This will give you an idea of how you anticipate your business to perform so to ensure its continuity as well as potential expansion.
Together with the fixed costs, your budget will force you to think about all the variable costs (for example stock purchases), so there aren’t any surprises when these expenses come up.
A good budget will always keep you one step ahead.
Comparing your actuals to your budget:
With the outcomes of your budget-to-actual report in your hand, you can now start to evaluate the items that you need to address first in order to lower your costs.
This will allow you to concentrate on costs that have the greatest influence on your business and now we can start strategizing on how to reduce these costs. For example, negotiating your rental price with your landlord to assist you in reducing your fixed costs or looking for suppliers who can provide you with discounts, should you purchase in bulk to reduce your variable costs.
Regular evaluation of your systems:
A good strategy can be a great strategy if you are consistent in applying it.
It is vital to be consistent in evaluating on how your business is performing and tracking your costs as you go along.
We suggest running an income and expense report each month to ensure that you are on par with achieving your goals. This way you can identify discrepancies quickly and set a plan in motion to rectify it moving forward.
And it is as simple as that – by doing this, you have a cost management plan in place together you easily identifiable process to help you keep track of your business.
Any business plan or a self-improvement plan takes time and commitment to implement.
Over the years, here is what we at Thorntons have found works for us our clients and we would like to share our tips and tricks with you!
- Set reasonable business goals
- Implement an accounting software that works for you and your business
- Automate as many tasks as you can
- Don’t shy away from technology
- If you’re stuck, call us – that is what we are here for
Your businesses efficiency improves when you have a clear goal in mind and having a good cost management process in place helps you to do that.
Your business can succeed! Make the change today to bear the fruits tomorrow!