Join my FREE business growth workout!

And I'll show you how to grow your business, work less and make more money with proven strategies that work right now...

  • get more clients without cold calling
  • reduce costs, without cutting service
  • know your numbers, without knowing numbers
  • what tools to use to make you more productive
  • Plus much, much more

Get Instant Access To My Free Business Growth Workout

Work With Me

You, Me, Big Results.

Learn More →

Blog

Regularly updated straight from the vine

Learn More →

FREE Resources

Not your average Business Toolbox

Learn More →
Home » Grow Your Business

How to grow your business (part 5)

Manage your costs

Although the economic downturn has forced companies to re-examine thier cost base, some companies have started to look at this rather late.  However, many companies that have reduced their costs have failed to to reduce their cost base in  a long-term sustainable fashion, whilst successfully maximising profitability.

Companies should focus on enhancing operational perfomance. Go for targeted rather than across the board cuts. Extract better value. Reduce unecesseary complexity. Look at whether you business model needs to change.

To be in the right place for when the  economy turns, the emphasis should be on:

* improving business performance and driving profits through improving efficiency and eliminating waste;
* managing people costs.
* improving planning and execution;
* simplifying and improving business processes
* improving the overall cost control environment and creating a cost culture; and

What questions should you ask?

Cost of supply

* Is  your business making and buying the right things?
* Am I putting its skills and competitive advantages in the right place?
* Is the company eliminating waste?
* Are the operations completely aligned to the end consumer?
* Can we employ smarter procurement techniques?

Value creation

* Does your management team understand where value is being created?
* Which products make money and which products loose money?
* What profits are your activities generating and where are you wasting money?

Business structures

* Is your company organised to service your customers in the lowest cost way?
* How much do you spend on business support? Is this appropriate?
* How much overhead creates value and how much is just overhead?

Controlling your people costs

* Are your people doing to maximise profit and minimise waste?
* Are you doing all you can to reduce your people-related costs such as holiday, pensions, share schemes, sickness pay, benefits and car schemes?
* Are you doing tasks that could be done more cheaply elsehere (outsourcing activities)?

Cost culture

* Long term, how do you keep out cost creep?
* Are your business processes and practices aligned to keep costs down?

So what is your business doing to keep down costs?

8 Comments »

  • Alex said:

    The only problem I have with ‘my people’ costs is when I subconsiously sneak off for a cold one, spending the company money (read; the wife’s)
    Although this post applies more to the offline business, or at least one that is not based around the individual business owner – I can still get value here, especially when you talk about being in the right place when the economy turns. granted I dont need to worry from a financial perspective, but being aware of these things can only do positive things for my business in the long run.

    Thanks Matt
    .-= Alex´s last blog ..Just Keep Swimming =-.

  • Matthew Needham said:

    Lol Alex! Yes, I guess that’s managment for you though! 🙂
    Really pleased you’re getting value from this. I’m going to pull all these posts into to a free ebook in a few weeks. I’ll send you one when it’s through.

  • Jean Sarauer said:

    As Alex pointed out, there is a value here for the self-employed individual working online too. I asked myself the questions in the article and found areas in my business that need further examination and improvement.
    .-= Jean Sarauer´s last blog ..When Bad Things Happen to Good Bloggers =-.

  • Matthew Needham said:

    Hi Jean, a lot of the businesses I work with earn their money essentially offline. So it’s good to see both online and offline businesses pick up things of use. Thanks for the comment!

  • BrandonBurgh said:

    Matthew,

    I once heard it said, somewhere, that before bringing on somebody new, you should be able to guarantee that they will add at least 3X their value to the company vs their wages. I believe it may even be more than that. You brought up some great points here.

    PS…I like the “Achieve your dreams the Tomato Way” 🙂

    Brandon
    .-= BrandonBurgh´s last blog ..Warrior’s Stumble – Breaking Through Barriers =-.

  • Matthew Needham said:

    Hey Brandon, that’s absolutely right, and that assumes you’re selling stuff at 150% of cost. If you’re working on margins smaller than this, then each employee would need to contribute a lot more.

    How to achieve your dreams the tomato way is going to be awesome! Thanks for your comment!!

  • Steve Scott Site said:

    Your article provides some great information on saving money and budgeting, but it sounds as if outsourcing is mentioned as a cheaper alternative to hiring a “regular” employee. I occasionally outsource various tasks to freelancers, typically activities that will give ME more time to spend on bigger, more important aspects of my business.
    .-= Steve Scott Site´s last blog ..4 Signs of Bad Time Management =-.

  • Matthew Needham said:

    That’s a very good point you mention there. It’s certainly true, that outsourcing can be cheaper, but it’s about giving you more time to achieve your goals. Thanks for taking the time to share this