The global economy is set for a major reset as the world confronts the impact of Covid-19. Cutting costs has now become a top priority for many organizations out there. Applying the best professional business practice strategy and approach for cutting cost prepares organizations for long-term success.
Industries and businesses always face periods of economic uncertainty. In these circumstances, they are forced to make challenging decisions when it comes to business operations and finding ways on how cost reduction can be implemented.
However, many businesses tend to turn to headcount reduction as their first initiative in reducing cost. These accelerated responses seem like the most logical response to maintain cash flow and improve profitability and liquidity. However, they have a more long-term opportunity cost. Extensive headcount cuts tend to have a negative long-term impact. This impact exceeds the short-term cost savings associated with headcount reduction.
Businesses don’t cut costs because it’s a fun exercise. In most cases, it happens in the heat of a financial crisis or pressure exerted by external forces, commodity prices, business competition, or a reduction in sales growth following weak economic conditions. In such situations, it is important to know what drives business costs. This will guide your business ideas and initiatives so as to make significant and durable reductions in business costs.
Cost Reduction Techniques
Any business has several costs that deduct from the bottom line. As the business grows, it becomes hard to perform cost reduction while improving organizational efficiency. However, no matter the size of your business, one can always reduce unnecessary expenditures.
Evaluating Business Expenses
Many businesses spend money on things they do not necessarily need. Businesses grow and evolve with time. Consequently, this means cost reduction has to also change with the pace your business is moving. As soon as it starts growing, business owners should implement low-cost spending strategies that will eventually increase the bottom line.
By eliminating unused products and redundant services, you can redirect resources to serve other purposes. You can expand services, train staff, optimize workflows, and more. With more cash flow at your disposal, spending it on growing your business can increase organizational efficiency considerably.
However, this form of cost reduction can be misleading when overdone. Even though it’s wise to eliminate unneeded expenses, many growing businesses are stuck on this method of cost reduction. They tend to be too constricted and spend pennies from expense budgets instead of focusing on other reliable cost reduction methods.
Outsourcing Contractors and Freelancers
With the current global situation, many people are now working remotely than ever before. Taking advantage of this trend can prove to be a very effective cost reduction strategy for businesses.
One gets to save money by not having to rent out office space or spending on office supplies. You also don’t have to provide benefits to freelancers because they are self-employed individuals. Besides, unlike in-house professionals, studies show that remote workers are happier with their self-employed work. Hence, this increases their productivity and they perform better at tasks.
Freelancers and contractors are independent and only work on a part-time basis as opposed to in-house employees. One of the perks of freelancers is that they work on their schedule, and produce results for the business at discounted pricing.
Enhance Workplace Transparency
Data siloes can ruin your business. One could lose valuable data and put the business at risk while being exposed without a comprehensive strategy of your growing organization. The more siloes one has, the more blind spots there are, thereby, attracting fraud, theft, and maverick spenders to your business.
By integrating cost reduction systems and applications into your organization, it becomes harder to hide waste. These systems give one a clearer view of their growing organization and exactly where the budget goes.
With increased transparency, one gains a better understanding of their organization and how lower-cost strategies work for the better. In the long-term, this can increase revenue and open up opportunities for their company.
Look for Renewable Alternatives
If you have an office space, going for green options can reduce the electricity bill. Energy-efficient appliances such as smart thermostats or treated windows can help cut down on energy costs.
Alternatively, one can educate their staff about effective ways of optimizing energy use. This significantly helps lower the company’s carbon footprint while also inspiring a workplace culture around implementing cost reduction strategies.
Being a company that has its objectives rooted in caring for the bottom line helps inspire employees to care more about the work they do to grow the business. Consequently, this will make them more invested and more productive in the office space.
Automate Processes as far as possible
As days go by, there’s always a new technology that provides technical solutions for business problems. It is better to integrate cutting-edge solutions as opposed to hiring more people who are prone to making mistakes. One can save on costs by finding software that optimizes workflows and delivers on business demands.
The quickest way to reduce costs in the business is to shift from manual processes to automated processes. Automation makes things easier and more efficient even for employees. This way, the employees can have more time to focus on other complex issues facing your business.
Integrate Software Solutions
There is always a new application, system, or feature that can boost your business. Be it social media or other integrations, businesses looking to reduce costs across their organization have to automate and integrate their systems so as to provide better services to customers.
Traditionally, it all got down to hiring developers or outsourcing software development. But with COR, we provide a more convenient solution that reduces inefficiency while reducing costs.
Our software helps professional services companies to reduce costs by advising them which projects are more profitable. We help businesses determine their cost of man-hours and help them in enhancing their operations by making them more efficient using our project and resource management solutions.
How Professional Services Companies Can Use COR in Cutting Costs
Accurate Time tracking and Estimation
Using artificial intelligence, COR can count the interaction of each user with the platform and suggest the number of hours it takes to complete a task with the click of a button.
Our platform allows you to assertively predict the time each project takes by summing up the tasks that constitute the respective estimates. You can then understand how much time it takes to execute them and prevent losses due to miscalculated budgeting.
Having effective, real-time time tracking can help you make decisions that guarantee the profitability margin of the projects. Knowing how long the projects take and how much equipment is required will enable you to make better budgets and avoid wasting money.
Better Resource Management
COR allows you to know the availability of your teams and members – enabling you to assign or reassign tasks and move deadlines. This allows you to distribute work accurately and efficiently, prompting you to avoid saturation of talent.
You can now be assured of running costs by determining the man-hours of your company, which is the main asset of any professional services company. You will be able to make better choices when it comes to business and the recruitment of your business’s productive capacity.
Project Management with profitability in mind
Our project management solutions allow you to have more visibility of the status of each project and enable you to make decisions in real-time. You can preview the progress of projects, the team in charge, the status, current frequency, and budget assigned to the project. This allows you to calculate the profitability based on your projected profitability and current profitability.
COR allows you to automate task creation using our customizable project templates. You will then be able to standardize your operation and recover billable hours wasted on manual tasks plausible to be automated.
Identify the services that are not being profitable
COR helps professional services companies to reduce costs by advising them on profitable projects. Our software help businesses determine their cost of man-hours and help them in enhancing their operations by making them more efficient using our project and resource management solutions.
COR enables you to identify what types of services are not so profitable for your company. Leverage our artificial intelligence system and be able to carry out a profitability analysis before generating any losses. We can help you understand which services would bring profitability to your business and which ones require adjustments.
You can now preview the progress of projects, the team in charge, the status, current frequency, and budget assigned to the project. This allows you to calculate the profitability based on your projected profitability and current profitability.