Budget 2023 and cost-cutting strategies for your business
The fiscal policies presented in the 2023 budget statement seeks to restore macroeconomic stability and boost investors' confidence by increasing the domestic revenue base, reducing government expenditure, and reviewing the tax laws to block leakages of tax revenue.
Businesses must implement cost-cutting measures as soon as possible, especially now, to reduce expenses and increase earnings, especially if their products and services are dependent on those costs.
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Cost has increased in significance, particularly in light of the rising cost of living, and has replaced quality as the primary market difference. Such cost-cutting measures will lower operational costs for firms while increasing productivity and wisely allocating resources.
The majority of small firms struggle with high operating costs and declining sales, particularly when some costs are unavoidable. The following cost-cutting measures will assist in lowering operating expenses while increasing revenue for the company.
Cut employee costs
Finding solutions to lower labour costs will increase your profit margin because workers represent the majority of a business process's costs. As an organisation expands, administrative costs frequently increase.
Business owners must identify strategies to increase staff productivity while making sure that any cost-cutting measures taken won't negatively affect your company's aims and objectives. Providing employees with stable work schedules, offering rewards for success, boosting output and lowering staff turnover are some strategies for cutting personnel expenditures.
Negotiation skills
Most suppliers charge higher for their raw materials, especially during this period of uncertainty, and also due to lack of trust with the business owner. It is important for business owners to establish payment terms with the supplier and be able to negotiate the cost of raw materials. Business owners should develop a mutually beneficial relationship with their suppliers and need to build a long-term relationship through negotiation and improved payment terms.
Travelling costs and managing fuel
Reducing travel and managing costs in business is a high priority for many businesses. Many small business operating costs have greatly affected travelling costs and managing fuel. Although they are unavoidable, I believe business owners can cut down on unnecessary expenses usually associated with business travel.
Businesses must develop fuel monitoring usage reports to identify vehicles and drivers who are using most fuel as well as addressing speed limits.
Technology and digitisation
The current industry revolution has exhibited how exactly automation can help in reducing overhead costs and increasing productivity in businesses. While most business owners will be overwhelmed by the IT costs and its complexity, it is important to note that although you incur a high cost at the beginning, the use of modern technology solutions will increase your business efficiency of your operations.
This I believe will bring your operating costs down in the long run and help improve the business output and bottom line. One of the most common and promising technologies is cloud computing which is a good investment in reducing capital costs and day-to-day expenses.
Reducing overhead cost
Reducing overhead costs usually refers to looking over the day-to-day expenses of your business and finding areas where you can lower costs and increase your profit margins and boost the business bottom line.
A business must always keep track of their operating expenses, especially in areas of utility, administrative and supervisory expenses, supply etc. For instance, the business must consider whether to buy or to rent in order to cut down costs.
Cost Savings of remote work
Business owners will benefit from reduced overhead costs including rents, rates, utilities and supplies, catering, cleaning and transportation. It is, however, important to note that remote work requires a certain degree of trust to allow your employees to work from home.
There are also challenges associated with onboarding, discipline and communication. Putting systems in place will help to reduce a significant amount of costs in the long run.
The writer is a lecturer, University of Professional Studies Accra
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