Cost control is always a go-to strategy when business conditions are tough, but it shouldn’t be de-emphasized when economic conditions improve. After all, tight controls on the cost side of the ledger strengthen businesses and provide them with added flexibility to invest in growth opportunities.
Still, identifying cost control methods can sometimes be challenging and time-consuming even for financial professionals. Consider these five suggestions for a fresh approach.
1. Get everyone involved.
Challenge employees throughout the company to identify ways the business can save time or money. Most everyone can probably point to inefficiencies or activities with a poor return on investment.
Your outside partners — suppliers and vendors — might also be able to offer ideas on how your company can reduce expenses or how they may be able to work with you at a lower cost by changing payment terms or ordering patterns. Consider rewarding employees and business partners whose suggestions are implemented.
2. Be greener.
Take a fresh look at how you can save on energy costs. Are your office lights and equipment all energy-efficient? What about your heating and air conditioning system? Also examine options such as window film and solar panels that could help you lower expenses.
3. Reduce your office footprint.
Evaluate whether your company is fully utilizing its office space. Maybe there are vacant offices within your building that could be leased out? If you have staff who frequently telecommute, you could reduce your physical office space and lower overhead costs by setting up shared work stations.
4. Work with interim professionals.
Bringing in consultants allows companies to adjust their staffing management to match business opportunities. By working with professionals on a project basis, companies can quickly access consultants' specialized subject-matter expertise and skills as needed.
5. Challenge accounting and finance staff.
Work with your team to apply a cost accounting perspective to business problems and focus on how your business processes and activities influence costs. Another way to build this knowledge is to have accounting and finance staff work with different business units for a period of time to expand operational knowledge and gain firsthand insights into cost drivers.
Even in good economic times, cost control is important because it improves your company’s ability to operate from a position of strength. Don’t wait until you’re forced to cut costs. By being proactive and continually focusing on cost control methods, you’ll be less likely to need to react suddenly to changing circumstances.