Thursday, June 20, 2024

Fighting Cost Creep In Your Business.

October 16, 2018 by  
Filed under Money/Business, Tech/Internet, Weekly Columns

(Akiit.comAs a business evolves, it’s expected that its financial situation will evolve, too. It should be growing, inviting new customers and clients. As a result, more needs to be invested into the business. You need the resources to make sure you can keep all those customers and clients happy. But, all too often, the costs start to grow at a faster than the revenue. This is cost creep, and it can be prevented if your eyes are open to it.

You can’t beat a budget

One of the reasons that cost creep gets so far is that many businesses do not have their accounting in order. Too many business owners wait until tax season to get their books up to date. There is a wide range of business budgeting apps that can make it a lot easier to track all your accounts payable and accounts receivable. You can portion off sections of the revenue to be spent on certain things and keep an eye on them so that you can more quickly recognize when certain costs have grown larger than you anticipated. This means you can be more flexible and react to overspending as soon as it happens, rather than later discovering it’s a much larger issue than you previously expected.

Track your expenses

You might be in control of all the costs inside the office, but what about outside it? If you have a sales team or you send employees to networking events like conferences and trade shows, you are going to be providing for expenses made on that trip. However, sometimes people can get a little spend happy or simply not be aware of the most economic choices when hiring a car, for instance. An expense tracking app allows you to get a direct feed of what’s being billed to the expense account, so that you can put together tips that can help your team ensure that they’re keeping themselves well-supplied, but without being wasteful with company money. You can also cut on the expenses related to travel by, for instance, making fewer trips out to your clients and meeting with them online instead.

Don’t hire more than you can afford

While you’re scaling the business, it’s all too easy to believe that hiring more people is always the right solution. However, that couldn’t be further from the truth. Besides the pay that you owe them, each employee comes with significant cost, from recruitment to training to benefits. Instead of hiring more people directly to the team, you should look at which duties and responsibilities you can share with the team by using the right automating software. What’s more, you should look at what you can outsource to other businesses in the area. Not only can it be more cost-effective for workloads that aren’t large enough to justify a new role, but you get the benefits of immediately working with an expert instead of having to build one.

Watch those printing costs

Every office needs a printer, but you might not need to be making as much use of yours as you currently do. Save on your printing costs by ensuring you’re partnering with suppliers rather than buying at retail. You could get much cheaper paper, Epson ink cartridges, and toner by buying in bulk. You might also be able to reduce how much you need to print. Most businesses cannot make the switch to a 100% paperless system. However, by creating a digital filing system and using Cloud storage to backup those files, you can reduce the risk of losing valuable documents due to hardware failure. Going partially paperless not only saves on the costs of printing, but also the costs of storage cabinets, helping you free up some space in the office.

Get rid of the landline

Another major tech cost that you could probably do without is your landline. This isn’t a suggestion that you cut your business off from all phone calls, however. Rather, it’s worth looking into the possibility of installing a VOIP system in your workplace. Virtual phone lines cost a lot less than the traditional analogue setup. What’s more, they can make it easier to create switchboard systems that allow you to more quickly connect incoming and internal calls to the right people with little effort.

Find new ways to reach your market

When the business is first growing, it’s entirely reasonable to assign the largest part of your marketing budget to advertisements. They are some of the most effective tools for making a great short-term impact on the market. However, if you’re past that launch and you have an existing customer base, ads are no longer as effective as they once were. Instead, you should look at more cost-effective methods of growing that audience. Content marketing, influencer marketing, social network marketing, and podcasts are all examples of how you can more organically grow your audience in the long-term and costs much less than keeping up a sustained advertising campaign.

Don’t do extra without getting extra

This is primarily for those businesses who provide services, rather than products, to clients. Cost creep is very directly related to scope creep. This is when a project or service for a client continues to grow time and time again to suit their needs without your business being afforded the proper compensation for it. This is why it’s crucial to make sure that your services come with contracts outline the scope of what you provide to the client. You shouldn’t be entirely inflexible, you should offer any of those additional services at a premium if they’re going to inflate the size of the project and the amount of time it takes to complete it.

Cost creep is one of those insidious risks that lurks deep in every business. If you don’t pay attention to the budget, you will find that those expenses will start growing, clients will become less profitable, and you will be wasting more resources than you ever thought you could. Hopefully, the tips above help you prevent that.

Staff Writer; George Adams

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!