For businesses that are struggling to meet their profit targets staff morale can be negatively impacted by fear of layoffs and job cuts. These fears can then impact productivity, which in turn can further hurt the overall results. It becomes a vicious circle that can be hard to break.
However, staff can truthfully be told their jobs will be made safer by cost-cutting by prudent cost reduction programs, particularly if the programs are managed by external specialists that are not engaged to make job cuts. In fact, a well-managed cost reduction program will add to job security by helping to return the organization to profitability as the money saved goes straight to the bottom line.
Nearly all businesses can cut costs on overheads such as telephone and internet bills, janitorial costs, freight and courier charges, WSIB, printing and stationery effectively releasing hidden profits. The challenge that most businesses encounter is that that they don’t have the resources to devote to all of their overhead expense categories. Even if they do have the resources they don’t have access to current benchmarking data to verify if they are receiving top value on the dollars that they are spending.
Some Canadian companies are overpaying their existing suppliers by as much as 50%. What is the solution? Businesses need to identify cheaper and better value suppliers, install a more centralized ordering and control system and most importantly, implement these changes effectively. It's not easy to generate a culture of change, but to be successful that is the underpinning to being able to obtain the desired results. If the stakeholders feel they've been part of the solution, then they'll be happy."
Surprisingly, you may find that rather than resist and objecting to an independent examination of overhead costs, often employees willingly embrace it. You may find that staff will say: 'We've always wanted to do this, but nobody's ever listened'.
Telecommunications is an example of a cost category that is regular subject to overspending by business - and staff mobile phone bills make up a large part of the sting. But staff mobile bills can easily be cut by 20 to 30 per cent.
Controlling the cost of mobile charges is one of two main ways a small-to-medium business can cut overspending. The other is to get more competitive rates by looking at alternative carriers, as well as, other plan options offered by the incumbent supplier. However, it takes a great deal of knowledge of the intricacies of the offerings by all of the carriers to craft a program that meets the needs of the company and also delivers savings.
Common mistakes phone companies make are to charge for redundant equipment, or to charge client companies at the wrong rate for the wrong phone plan. Sometimes it's just a case of the client misunderstanding the rate at which they are to be charged.
Small-to-medium businesses often are more likely to be paying more for their overheads area than larger businesses mainly because they don't have the large buying power by themselves. Also, they often don't have the people to review all of the costs regularly, because they're too busy running their core business.
Ad hoc smaller changes can often mount up to a substantial cost. If you're looking at the cost of ordering print or office supplies or cleaning materials, you've got to have some control over who's doing the ordering and what they are ordering. To do this you've got to agree on what product range you're going to use, what quality you're going to use and who you're buying them from. Procedures are really important; putting in a system of procedures and controls will help to insure that purchasing is done effectively.
However, success will not be achieved without proper implementation. Regular monitoring is also a key success factor to ensure that the company sticks to the plan over a longer period, at least 18 months, to ensure that savings are realized.
