Now we will examine where to look for real savings. As promised in the previous article, we will not mention staff reductions in this context.
Chances are that if you focus on the following areas, your colleagues will try harder to help identify opportunities for savings. After all, if you succeed, their own jobs will not be exposed to the risk of cost reduction.
Identify inefficiencies
Of course, every single element of the cost structure deserves your attention. However, there are some reservoirs of inefficiency which are quite common everywhere, according to an article on the cfo.com website. Make sure that middle management and staff understand your goal is cutting unnecessary expenses, not jobs. Then examine primarily the following areas:
- Renting offices: Often firms rent office space they don't need. If there was growth anticipated which did not come, maybe you can save some money here. This applies especially to companies with multiple locations.
- Renting equipment: You might also have excess equipment, e.g. too many printers, too many trucks leased … Equipment is always worth the attention, so investigate this area closely.
- Vendors: Don’t address only operating expenses. Chances are that there are some opportunities to negotiate discounts based on volume with your vendors.
- IT: Audit also expenses generated by needs connected to IT. Maybe you need fewer licenses for a certain software.
- Policy for entertainment: A poorly designed budget for team-building activities and suchlike can result in huge spending. Put together a reasonable policy and enforce it strictly.
-jk-