6 Cost Reduction Strategies for Mid-size Businesses

6 Cost Reduction Strategies for Mid-size Businesses

Starting a cost reduction program can at times seem daunting, there are a few key areas that you should be able to find cost savings that will yield results within weeks of implementation and bring a long lasting change.

1. Look to the cloud for process improvement & cost savings

Review your current IT infrastructure and software strategy, moving your business into the cloud could reduce your IT spend significantly.

Infrastructure & Platform as a Service (IaaS/PaaS) can save businesses thousands on hardware and software costs. Flexible and scalable payment options ensure you do not waste valuable capital on expensive software and equipment.

Replacing physical servers with virtual services can also help you reduce energy costs and lessen your carbon footprint.

Infrastructure as a Service (IaaS) companies provide support to their customers which could give you the opportunity to reduce IT support staff costs.

Software as a Service (SaaS) provides small businesses with enterprise level solutions at fraction of the price.

2. Redefine how and where your business operates

Premises and staff costs are the largest costs in most businesses, to achieve substantial cost reduction with your business you need to redefine where, how and with whom your business operates.


Where?

Many business owners believe they should locate their offices in a central, well-known location as it adds prestige to their business. For some businesses such as retail, location is crucial for business success. However for most businesses, a central location is not essential because what drives sales is the product or service, not the location.

Conduct an assessment on what drive sales to your business, if location is only a minor factor consider moving offices to a cheaper location.

There are lots of serviced office options to choose from, this will give you an opportunity to reduce utilities, repairs and maintenance. Many serviced offices come with shared IT resources, which will allow you to reduce your IT spend.

How?


The popularity of mobile phones, laptops and tablet computers is driving businesses to implement Bring Your Own Device (BYOD) programmes. Instead of buying expensive hardware for your employees you invest in the IT infrastructure to enable them to use their work on their own devices. Even if you contribute to the hardware costs for employees, a well planned and marketed BYOD programme can save money and improve employee satisfaction.

If your employees can work remotely, assess whether they all have to work at the same location at the same time to be productive. Allowing employees to work flexibly from home could give you the opportunity to downsize your premises and implement a hot-desking policy in the workplace.

This not only reduces potential cost to your business but can also increase employee satisfaction which could increase employee retention rates which could consequently save you money on recruiting and training new staff.


Who?

Once you can get your employees to work from home, think about whether your staff needs to be Canada based. Labour can be much cheaper abroad especially in Asia. Or think about getting some of your costs outsourced - by a company or managed through freelancer web or by crowd sourcing

Review your current business processes, can you do things differently? Can you improve your processes so you perform the staff tasks with less staff?

People are put off of outsourcing because they feel that they are losing control but they are forgetting that they are gaining more time to focus on what is truly important to their business.

3. A a grip on your Overheads

Energy prices are increasing but this does not mean that savings cannot be made, not enough businesses challenge and interrogate their utility bills it simply isn't good enough to just accept that prices will increase. Many multi site businesses are on different tariff and have inconsistent billing based on estimates and often find it difficult to recover money from utility companies.

Better overhead cost management comes from understanding consumption in each unit and monthly trends, try to gather this information for at least a year.

Get control of your utility bills by analyzing how much energy you have consumed over the past year and how much money you have spent.

Firstly, you should use this information to decide how you can reduce consumption. Think about how and when you consume energy, challenge any assumptions that have been made and focus on reducing consumption.

Secondly, you should try and broker a new deal with a new supplier. Knowing just how much you have consumed in the past year, and how much will consume in the future will help you get the best deal possible from a new supplier.

If you are using separate suppliers for gas, and electricity try to consolidate this into one and use increased bargaining for leverage to negotiate a better deal. The same methodology can be used for telephony and broadband.

4. Renegotiate Contracts

Assess all of your contracts and try and shop around. For instance business insurance cannot be avoided, but ensure you review your policy annually and make sure you are getting the best possible price.

Shopping around with other suppliers may take time but it could save your business thousands every year.

5. Use time and space more wisely

Travel should be restricted to sales meetings and business critical meetings. There are many great web conferencing and video conferencing solutions out there that will save you money.

6. Think Outside the Box

Every business is different, keep thinking of ways to improve processes and reduce costs. Have a monthly meeting with employees to think of new ways to save money and improve productivity. Offer employees' incentives to come up with ideas, it will save you money in the long term.

Conclusion

Times are tough and to pull out of things businesses should look to reduce costs, this is often deemed negative but you should see this as a positive action as you are making your business more efficient.

Redefining how your business operates forces you to access your value proposition and makes you more competitive and hopefully more able to provide your customers value.

Chris Wilkinson.                            

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).CANADA

E-mail: buspilot@bell.net

5 Ways to build powerful customer relationships…..

Powerful relationships don't just happen from one-time meetings at networking events--you don't need another pocketful of random business cards to clutter your desk. What you need is a plan to make those connections grow and work for you. And it's not as hard as you think. Here are five essential tactics:

1. Build your network--it's your sales lifeline. Your network includes business colleagues, professional acquaintances, prospective and existing customers, partners, suppliers, contractors and association members, as well as family, friends and people you meet at school, church and in your community.

Contacts are potential customers waiting for you to connect with their needs. How do you turn networks of contacts into customers? Not by hoping they'll remember meeting you six months ago at that networking event. Networking is a long-term investment. Do it right by adding value to the relationship, and that contact you just made can really pay off. Communicate like your business's life depends on it. (Hint: And it does! Read on.)

2. Communication is a contact sport, so do it early and often. Relationships have a short shelf life. No matter how charming, enthusiastic or persuasive you are, no one will likely remember you from a business card or a one-time meeting. One of the biggest mistakes people make is that they come home from networking events and fail to follow up. Make the connection immediately. Send a "nice to meet you" e-mail or let these new contacts know you've added them to your newsletter list and then send them the latest copy. Immediately reinforce who you are, what you do and the connection you've made.

You rarely meet people at the exact moment when they need what you offer. When they're ready, will they think of you? Only if you stay on their minds. It's easier to keep a connection warm than to warm it up again once the trail goes cold. So take the time to turn your network of connections into educated customers.

3. E-mail marketing keeps relationships strong on a shoestring budget. Build your reputation as an expert by giving away some free insight. You have interesting things to say! An easy way to communicate is with a brief e-mail newsletter that shows prospects why they should buy from you. For just pennies per customer, you can distribute an e-mail newsletter that includes tips, advice and short items that entice consumers and leave them wanting more. E-mail marketing is a cost-effective and easy way to stay on customers' minds, build their confidence in your expertise, and retain them. And it's viral: Contacts and customers who find what you do interesting or valuable will forward your e-mail message or newsletter to other people, just like word of mouth marketing.

4. Reward loyal customers, and they'll reward you. According to global management consulting firm Bain and Co., a 5 percent increase in retention yields profit increases of 25 to 100 percent. And on average, repeat customers spend 67 percent more than new customers. So your most profitable customers are repeat customers. Are you doing enough to encourage them to work with you again? Stay in touch, and give them something of value in exchange for their time, attention and business. It doesn't need to be too much; a coupon, notice of a special event, helpful insights and advice, or news they can use are all effective. Just remember: If you don't keep in touch with your customers, your competitors will.

5. Loyal customers are your best salespeople. So spend the time to build your network and do the follow-up. Today there are cost effective tools, like e-mail marketing, that make this easy. You can e-mail a simple newsletter, an offer or an update message of interest to your network (make sure it's of interest to them, not just to you). Then they'll remember you and what you do and deliver value back to you with referrals. They'll hear about opportunities you'll never hear about. The only way they can say, "Wow, I met somebody who's really good at XYZ. You should give her a call," is if they remember you. Then your customers become your sales force.

If real estate is all about location, location, location, then small business is all about relationships, relationships, relationships. Find them, nurture them, and watch your sales soar.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).CANADA

E-mail: buspilot@bell.net

What is your selling system? (does your rep. have one?)

Example of a selling system……

Bought a car recently?.......You may recognize the selling system (below)?

           Do you have a SYSTEM for your sales effort? If not,  why not? Your system should be documented in the sales manual and updated by the sales manager, as new, more effective strategies are evolved. More.....when you have new sales people join you, you can pass along the "baton" of (sales) knowledge, rather than expecting the new recruit to teach himself from scratch. Save expensive training time & sell more, faster.

• Greeting and qualification--the salesperson will welcome you to the dealership and begin the process of qualifying your intentions, budget, and ability to purchase.
• Product presentation--generally takes place on the showroom floor. The salesperson will give you a "walkaround" presentation of the model in which you are interested.
• Demonstration drive--the salesperson will always attempt to accompany you. They will continue to sell the features and benefits of their car.
• Service walk--you will get an opportunity to see the service department while the salesperson extols its virtues.
• Refreshment--the salesperson will offer you a cup of coffee, usually from a vending machine. Why? Because the action of buying you a cup of coffee will "obligate" you to them, and a hot cup of coffee is best placed on the SALES desk. 
• Closing booth or desk (do you see the flow here?) It is here that the salesperson will generate a "worksheet" where the prices can be negotiated. After the worksheet is filled out, the salesperson may leave you "to check to see if the car is available." What they are really doing is touching base with the manager to fill him or her in on what has transpired with you thus far.
• Negotiations--the dealership will almost always begin negotiations at full list for their car and a minimal amount for your trade.
• Counteroffers--the goal here is to wear you down with small counteroffers.
• T.O.--The "turn-over"--if the salesperson is not able to "close" you, a sales manager will arrive to continue negotiation.

ADAPT the above system to your own specific product /industry/customer type.

The important thing is that your sales person has a selling system. Too often sales people  ’just wing it’, and lose you profitable business.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga), Canada.

E-mail: buspilot@bell.net

What is the paramount Strategic Driving Force in your business?

Driving Forces

Your company's driving force is the dominant factor influencing your decision making and central to setting your strategy.

A powerful technique for determining your organization’s strategy (the ultimate goal of strategic planning) is to consider its driving force.  They define the driving force as “the primary determiner of the scope of future products and markets.”

Your driving force is the dominant factor that most influences the making of major decisions.

The first thing to invest in when times are good; the last thing to cut back on when times are tough.

  The following 15 driving forces seem to cover most organizations, with examples of companies allied with each driving force.

1. Products offered – produces specific products (things) for its markets.
     Examples: General Motors, Coca-Cola

2. Services offered – delivers specific services (human efforts) for its market.
     Examples: Wells Fargo Bank, Charles Schwab

3. Market needs – focuses on meeting the needs of specific markets.
     Examples: Fisher-Price Toys, Windsor Ont. University

4. Customer needs – focuses on meeting the needs of specific set of customers.
    Examples: YMCA, Toronto Sick Kids

5. Return/profit – focuses on the achievement of predetermined returns or profits.
     Examples: United Way, Goldman Sachs

6. Size/growth – focuses on the achievement of a specific size or growth rate.
     Examples: Network Associates, University of Phoenix

7. Technology – applies its technological capabilities in innovative products or services.
     Examples: Intel, Microsoft, 3M

8. Human resources – leverages its employees’ specific qualities, skills, or training.
     Examples: Kelly Services

9. Service capability – leverages the depth or uniqueness of its employees.
     Examples: Value Line Publishing

10. Production capacity – leverages its investment in physical plant.
       Examples: Boeing, International Paper

11. Sale/distribution method – has a unique or distinctive way of marketing.
       Examples: Dell Computer, amazon.com

12. Natural resources – owns or controls a significant natural resources and has the capability to process     
       these into usable forms.
       Examples: DeBeers, Exxon

13. Land – owns or controls land and the uses to which it can be put by itself or others.
       Examples: King Ranch, Barrick Gold

14. Assets – owns or controls assets whose preservation is paramount.
       Examples: Noble Drilling

15. Image – seeks to maintain a specific organizational image within its markets and the products or services
       it produces.
       Examples: Cartier, Gucci

It is a rare company that can look at the above list and say, "Of course, it's obvious that our driving force is ___."  The discussion might start that way, but you can bet that someone else will jump in to throw cold water on that driving force and suggest another.  Indeed, my experience is that some of the richest, most vigorous, and deeply contentious debates in the entire planning process take place when the planning team tries to identify their driving force.

So how do you proceed to discover your driving force?

Begin by pruning the above list of all those driving forces that simply don't apply.  For example, if you only offer services, strike "products offered" from the list.  After eliminating the obvious ones, then ask yourself the opposite question: is there is another driving force that cannot be readily subsumed inside one of those remaining on the list?  If not, then add it.  You should now have a list of 6-8 driving forces to consider.

Now the real fun begins, not to mention hard mental effort, because every one of the remaining driving forces is important in some degree to the success of your company.  Every company needs to have sufficient human resources and technology to deliver a product or service to meet a particular market's needs in a profitable manner.  That's not the point.  The point of the exercise is to rank these in order of importance.

A structured ranking approach is best.  Perhaps the simplest means to this end is to consider them in pair-wise progression.  That is, take driving force #1 and compare it with driving force #2, and decide which is more important to your company in the actual making of major decisions and setting of important policies.  Next, compare #1 with #3, and then #1 with #4, until #1 has been compared with all the remaining driving forces.

Now take driving force #2 and compare it with driving force #3 and then with #4, etc.

The number of pair-wise comparisons grows rapidly with the number of driving forces.  For 6 driving forces, there are 15 comparisons.  For 8 driving forces, there are 28, and for 10 driving forces, there are 45.  You can readily see the advantages to taking some care in the selection of the initial driving forces to be considered.

My experience is that some comparisons of relative importance are "no brainers" and take only a few minutes for the planning team to reach consensus.  Other comparisons can take a half hour or more.  Altogether, with 6-8 driving forces to compare, you should expect to spend two-three hours to reach your final list of driving forces ranked in order of importance.  The effort you expend in putting this list together, and it is effort, will repay itself many times before the planning process is over.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).Canada.

E-mail: buspilot@bell.net

Whether you work with customers in retail, at trade shows, on  the phone, or in the company showroom, be sure to communicate your appreciation to the people that serve you well.  Believe it or not, a simple but sincere “thank you” goes a long way.

However you work with customers, take a look at the list and ask yourself how closely your people follow the rules.

21 Tips for Excellent Customer Service….

1. Smile when greeting a customer in person and on the phone (and yes, they can tell if you are smiling over the telephone!).
2. Use age-appropriate greetings, and avoid referring to older customers and women as “guys.”
3. Be proactive and ask how you may be of service.
4. Stay visible and available, but don’t hover.
5. Don’t turn away, walk away, start to make a phone call, or duck beneath the counter as a customer approaches.  (We’ve all had it happen to us.)
6. The live customer standing in front of you takes precedence over someone who calls on the phone.
7. Never judge a book by its cover—all customers deserve attention regardless of their age or appearance.
8. Leave food and beverages in the break room ie: away from clients. 

9. A customer doesn’t want to hear about your upcoming break.
10. Makes any personal calls when you’re on a break and out of earshot.
11. The correct answer is never “I don’t know” unless you add to it, “but I can find out for you.”
12. If a customer wants something that isn’t on display, go to the stock room and try to find it.
13. If the item isn’t in the stock room, offer to call another store or order it.
14. Learn to read body language to see if a customer could use some help.
15. Don’t let chatty customers monopolize your time if others are waiting.
16. Call for backup support if lines are forming.
17. Be discrete if a customer’s credit card is declined, simply ask them if there is another method of payment he or she would like to use.
18. Never discuss customers in front of other customers (they’ll wonder what you’re saying about them once they leave).
19. Inspect merchandise before wrapping it to make sure it’s not defective or the wrong size.
20. Make sure customers receive everything they’ve paid for before they leave your store.
21. Smile as you are saying goodbye and encourage the customer to come again.

And here’s one more tip: make sure that you give people more than what they expect AND smile.

 Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net