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4 Cost-efficient Ways to Reduce Your Business Spending

4 Cost-efficient Ways to Reduce Your Business Spending

By    |   Monday, 06 November 2017 12:12 PM

One concept in the field of business management that has attracted my attention in my college years till date is efficiency.

Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing the desired result. This is usually the watchword in the private sector and a thin line that distinguish the private sector organizations from their public counterpart.

In business, there are a thousand sources of expenditure that can shut down your organization if you’re not cautious. Many reports on business failures have attributed poor financial management as one of the main reasons for failure. However, in order to remedy this, here are five cost-efficient ways to manage your business expenditure;

  1. Outsource some Business Operations

Business organizations have different tasks to perform to achieve set goals. Tasks such as purchasing, sales, production, marketing, and recruitment involve huge expenditure and require a critical examination of business options for decisions that’ll result to cost minimization.

For instance, a beverage company had to outsource the transportation of its products to a different part of the country to a haulage company when the company executives carried out a study and found that it’ll be cost effective to outsource than to a haulage unit under the supply chain department. this business decision paid off since the company was able to reduce the cost of operation.

Unless business owners make sound decisions regarding the cost of business operation by outsourcing work to competent professionals, the increasing cost of business operation may put them out of business.

  1. Embrace Apprenticeship Program

Personnel cost is usually huge in many business organizations. This includes the cost of employees’ recruitment and training. However, one way to minimize these costs is through an apprenticeship program. By having a team of apprentices with both practical skills and an understanding of fundamental principles in the workplace, issues on employees’ recruitment and training will be tackled.

The National Apprenticeship Service reported that 59% of the companies examined reported that training apprentices are more cost-effective than hiring skilled staff, with 59% believing that Apprenticeships lead to lower overall training costs and 53% feeling that they reduce recruitment costs.

  1. Adopt Online Marketing

Thanks to digital tech, the cost of advertising and marketing products and services is very cheap and affordable. Lots of businesses are going online as a way to reduce transaction costs and reach a wider audience. In the U.S. alone, a report by the US Census Bureau shows the number of internet users (approximately 88.5 percent of the population) and e-commerce sales ($394.9 billion in 2016). This is expected to increase in the subsequent years.

Social media platforms such as Facebook, Instagram, YouTube, LinkedIn, Twitter, Yelp, Pinterest etc. can be used to advertise and market products and services with little or without fees. Ana Heart, CEO of a Yoga Shop, in an email interview said ‘having an online presence is the shortest cut to attracting millions of prospective clients to enquire about your products and services. Fortunately for our generation, we pay less to advertise on various social media platforms and reach a wider audience’. This is why if you have a business today, you need a website and a social media presence.

  1. Reduce your Bank transaction Cost

As little as you may see it, the cost of bank transaction is huge and should be looked into. A wise business owner should be able to avoid multiple bank accounts and overdraft fees. The study shows that, in 2016, banks made 33 billion dollars in overdraft fees alone. Most big banks charge a whole host of fees to cash in on their customers including maintenance fees, transfer fees, international transaction fees, service fees, and minimum balance fees to name a few.

It is also wise to use the best credit monitoring service to monitor changes to one or more of your credit reports. Credit monitoring could alert you if a company checks your credit history or if a new credit card account or loan is opened in your name, among other things that directly affect your credit, according to the Federal Trade Commission (FTC).

The Bank of America advice that when it comes to banking, business owners should understand that business checking and credit card accounts may incur more fees—often at higher amounts—than individual accounts. So it's important to compare fees closely when shopping for a bank to meet your business needs.

Richard Agu is a Researcher, Entrepreneur and Freelancer, passionate about entrepreneurship and self-development. Currently, Richard writes for Entrepreneur.com, Goodmenproject.com, among others. Follow him on Linkedin.com by clicking here now.

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One concept in the field of business management that has attracted my attention in my college years till date is efficiency.
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Monday, 06 November 2017 12:12 PM
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