in analytical , cost , effective , improvement , Junaid.Tahir , Leadership , management , Profes...
in analytical, cost, effective, improvement, Junaid.Tahir, Leadership, management, Professional, Strategy
By Junaid Tahir:
Business costs are sub-classified into two categories; Fixed Costs and Variable Costs.
Fixed costs are
defined as the expenses which do not change as a function of business
such as salaries of employees, rents of the office, facilities and
equipment costs. However, please don't get confused that Fixed Costs
cannot be changed. Indeed they can be changed but their prime definition
remains the same that these costs are stable for longer duration of
time and do not usually get impacted due to on-going business volume.
On the contrary, the Variable Costs are the ones which keep changing
due to multiple factors.
Below is the list
of several domains and recommendations (minor tweak for SMEs and major
ones for large scale companies) in the form of questions in order to
give you a personalized experience and to invoke the thought process
for the business cost reduction:
i- How
much budget was utilized for marketing in last 6 months? How much
the marketing has been effective? Is there any need to re-evaluate the
marketing strategy?
ii- How much investment is done on customer's entertainment?
iii- Do
you do a monthly expense analysis audit? Do you know specific
techniques to optimize your marketing budget such as AdSense, affiliate
marketing etc?
iv- Do you consider B2B marketing, email marketing, banner advertisement, pay per click, video marketing or SEO optimization?
i- Does
the company's office and warehouse at different locations? Why not
having both at same location to reduce renting and transportation costs?
ii- Any
recent audit done to determine if the current rented space for office
or warehouse is worth its expenses? Is the size and cost in sync with
the requirements of business? Can this be moved to a less costly
area?
iii- Is there any tools, machinery or other resources which can be leased to earn some extra cash? Any marketing plans to do this?
i- Are
there any underutilized employees? Can some extra tasks given to
these employees to make them more productive or 'earning' resources?
ii- Can
some of the permanent staff be converted to contract based? This will
save extra benefit and reduce your long term liabilities.
iii- Can some of the tasks/ resources be outsourced? (HR services, Visa, documentation, maintenance etc.)
iv- Did any re-evaluation of resource responsibilities happened in last one years? Are there any employees with duplicate roles?
v- Company
sponsored mobile phone packages are fairly used? The packages are
carefully selected based on the role of each employee? Any audit
happened for the utilization of mobile and other resources given to
employees?
vi- Are the employees trained enough to perform their duties so that they make less errors and mistakes?
vii- Right policies are in place so as to reduce the reworks? What is the accountability mechanism?
viii- Mature and error free databases are in place for efficient and accurate reports generation and to avoid errors in data entry?
ix- Is
there any scheme available through which employees are given
suggestions for the improvement of organizations and get rewarded if
their suggestions are implemented?
x- Any specialised use of tracking employee online activities such as Manic Time?
xi- Employee
lay off should be last thing to do as it impacts your organization in
many ways such as loss of sincerity, productivity and efficiency of
the rest of the employees.
i) How vehicles are utilized in a day to day work? How much company is flexible for the utilization for personal use?
ii) How
vehicles are maintained? Is this task given to any agency to avoid
corruption and in order to enjoy free benefits such as car
replacements ,free wash, oil, and tuning services?
iii) How
vehicles are tracked for the daily utilization (how many kilo meters
travelled, how could multiple visits or same kind of visits be
reduced?
iv) Pick and drop of employee is happening on bulk basis or at individual level?
v) Restriction of some of the travel (local and abroad) possible?
i) Motion detection Sensors installed for turning lights off during off hours?
ii) Sleep mode enabled on laptop computers?
iii) Older bulbs/fans/computers are still being utilized which are poor when it comes to energy efficient devices selection?
i- How many printers & Scanners are in place? Can we reduce some of them?
ii- How many pages are printed per day? Any mechanism to control it?
iii- Is there any over utilization of pantry products? Employees are encouraged to use non-recyclable things?
iv- Which
of the policies and processes can be converted to paperless by
avoiding photocopying/ printing/ reproducing ? Can you run a paperless
company altogether?
v- Is there any strong mechanism of inventory management? Any products lost because of poor control on hardware resources ?
With these recommendations, I believe any company can optimize their business costs consequently improve their profit margins.
How to you optimize the costs in your organization?
Some articles you may like:
