With the determination to save and cut cost to be able to generate more in return, some businessmen have been doing cost-cutting measures the wrong way. This article provides you with Cost cutting strategies Ontario that are not healthy for the furtherance of your business. These are 3 things that shouldn't be on your cost-cutting list:
Running a company requires a combination of long- and short-term strategies. Especially during periods of economic uncertainty, executives must find a way to keep the company afloat in the short-run but prepare it for future growth. Payroll expenses are targeted to avoid paying high salaries and to eliminate redundant functions. Roles once held by middle managers are delegated to supervisors and upper management. Tenured employees can be replaced by interns, temporary workers or new hires for less pay.
Reduce Labor Costs. Is there a faster, better way to perform repetitive, time-consuming business methods? As you examine your business processes, focus on streamlining the most labor-intensive tasks. Any reduction in labor costs equates to an immediate savings. For example, by automating a task that requires six hours of manual intervention, you can expect to shave two hours off the total time to completion. In most situations, you can cut that time in half, yielding a significant cost-savings almost instantaneously.
Shorten Cycle Times. Examine your purchasing cycle. Does it involve too many manual processes to complete the sale? By automating routine tasks in the sales process, the purchasing cycle is shortened. Shorter cycle times mean that the money can come in much faster. Let us never forget, time is money!
It is a very simple logic: if your employees feel valued, trusted and appreciated, they reciprocate by giving their best in their specific jobs which can go a lengthy way toward helping your business. Satisfied employees provide good quality service, quality service equals happy customers and happy customers generate good business deals.
Value-added products and thinking future-oriented. Any product that no longer serves the needs of the customer or the business should be eliminated. Think future-oriented. Reducing jobs is a temporary fix. A focus on future growth strategies will keep a company afloat now and provide opportunities for additional expansion in the long-run.
Certainly you want to reduce expenses and eliminate unnecessary costs. However, these actions alone don't address the underlying problem. And the underlying problem is revenue. So relying on a cost-cutting strategy is only useful if you expect the business environment to improve. Otherwise you must take additional actions in the areas of competitiveness, pricing, products and services. These areas are largely under your control.
In conclusion, it is worth noting that Cost-Cutting Doesn't Go That Far. Cutting costs can only take the business so far. Yes, you can reduce expenses, but once you get into a major cost-cutting spiral, eventually there's no more to cut and the singular alternative is to close the doors - and go out of business. If you reduce staff it will typically have a negative impact on service. If you cut hours you will experience less customer traffic. If you substitute lower quality products you'll see less customer satisfaction.
Running a company requires a combination of long- and short-term strategies. Especially during periods of economic uncertainty, executives must find a way to keep the company afloat in the short-run but prepare it for future growth. Payroll expenses are targeted to avoid paying high salaries and to eliminate redundant functions. Roles once held by middle managers are delegated to supervisors and upper management. Tenured employees can be replaced by interns, temporary workers or new hires for less pay.
Reduce Labor Costs. Is there a faster, better way to perform repetitive, time-consuming business methods? As you examine your business processes, focus on streamlining the most labor-intensive tasks. Any reduction in labor costs equates to an immediate savings. For example, by automating a task that requires six hours of manual intervention, you can expect to shave two hours off the total time to completion. In most situations, you can cut that time in half, yielding a significant cost-savings almost instantaneously.
Shorten Cycle Times. Examine your purchasing cycle. Does it involve too many manual processes to complete the sale? By automating routine tasks in the sales process, the purchasing cycle is shortened. Shorter cycle times mean that the money can come in much faster. Let us never forget, time is money!
It is a very simple logic: if your employees feel valued, trusted and appreciated, they reciprocate by giving their best in their specific jobs which can go a lengthy way toward helping your business. Satisfied employees provide good quality service, quality service equals happy customers and happy customers generate good business deals.
Value-added products and thinking future-oriented. Any product that no longer serves the needs of the customer or the business should be eliminated. Think future-oriented. Reducing jobs is a temporary fix. A focus on future growth strategies will keep a company afloat now and provide opportunities for additional expansion in the long-run.
Certainly you want to reduce expenses and eliminate unnecessary costs. However, these actions alone don't address the underlying problem. And the underlying problem is revenue. So relying on a cost-cutting strategy is only useful if you expect the business environment to improve. Otherwise you must take additional actions in the areas of competitiveness, pricing, products and services. These areas are largely under your control.
In conclusion, it is worth noting that Cost-Cutting Doesn't Go That Far. Cutting costs can only take the business so far. Yes, you can reduce expenses, but once you get into a major cost-cutting spiral, eventually there's no more to cut and the singular alternative is to close the doors - and go out of business. If you reduce staff it will typically have a negative impact on service. If you cut hours you will experience less customer traffic. If you substitute lower quality products you'll see less customer satisfaction.
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