As specialists in reducing business costs, we know that cost reduction is not as simple as turning off all the lights and plunging the office into darkness. We know how a business operates and we know the right areas where you should be cutting costs, and where you should proceed with caution.
Business cost reduction is more than just negotiating prices with your suppliers and cost efficiencies can be found in all manner of ways you may not have considered. To give you an idea of what we mean here are 5 examples of how businesses reduced their costs:
1: Let there be (LED) Light
Read http://www.irishnews.com/business/2017/08/26/news/west-belfast-shopping-centre-cuts-electricity-costs-by-a-third-1120839/ for more information.
A Belfast shopping centre managed to cut their electricity costs by up to a third by replacing their inefficient light bulbs with more energy efficient LED bulbs across their vast facility. Owing to their large service area this managed to significantly cut business costs and reduce waste, with the cost-effective replacements having an estimated 18-month payback period. How long could it take you to recoup the cost of installing energy-efficient kit?
Read more about reducing your energy costs at – How to reduce your business energy costs in 3 easy steps
2: Mama’s and Papa’s renegotiates the rent
The upmarket maternity and children’s retailer had posted losses before effective business cost reductions saw them return to profits and made them an attractive prospect for sale. One of the first acts taken to secure the company was to renegotiate its rental agreements, reducing a major business overhead and freeing up funds. The stores’ new reduced leases meant the business returned to profitability and the landlords had secure paying tenants, albeit at a reduced rate.
3: Siemens invests to save on business costs
Siemens Wind Power understood that reducing your business costs in the longer term means that you sometimes need to invest in the short term. In chartering two new specialised ships to transport their much larger, cost-effective wind turbines, Siemens estimate that they will reduce their logistic costs by 15%-20% per year with the ships specially designed to cost-effectively transport components across the seas; proving it is good to look beyond just your office walls to manage waste and effectively cut your business costs.
4: Effective business cost reduction must come from within
http://www.proactiveinvestors.co.uk/companies/news/183428
Tanzania’s Shanta Gold had to launch a cost cutting program when increases in tax and royalties impacted their profitability. The company decided the best way to reduce business overheads and costs was to cut down on external contractors working at the mine. Whilst adding greater flexibility, external contractors came at a premium. Using their own business assets allowed Shanta Gold to reduce business costs whilst maintaining a core workforce at a lower cost.
5: Ditch the un-necessary business costs
https://digiday.com/marketing/pernod-ricard-takes-ad-buying-house-sees-benefits/
In the same vein Pernod Richard, the spirit making company reduced their business costs and earned a huge amount of revenue by taking external services bought in at a premium and bringing them in-house. The effective cost-cutting strategy saw a quarter of digital marketing come in-house, saving $71.5million in half a year in agency fees. Instead, they invested in cheaper, in-house experts within the company, reducing their marketing spend and allowing profits to be reinvested into growth in other areas.
So, there you go – business cost cutting and cost reductions can occur effectively in all businesses, so long as specialists are at the helm who understand the nature of the business. Knowing where costs can be most effectively made can allow you to reduce your business costs and improve your company’s profitability. It can be done – these five companies did!
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