Small Business Coaching - Reducing Costs

There is an old adage - 'It's not what you earn but what you spend' - which tends to dictate your personal savings.

There are people who on the surface appear wealthy and have well paid jobs but actually carry a lot of debt -living pay cheque to pay cheque because of lifestyle factors such as a big mortgage, school fees, expensive cars, expensive and frequent holidays and the latest technology.

There are others on more modest incomes who have perhaps lower mortgages and more simple lifestyles.

These people have a budget, always compare the market when they do spend and think carefully before they spend money on non-essentials.

In running your small business - and especially in the current economic climate - your costs play a big part in your survival and if you can pare these down you will increase your bottom line.

I am working with one small business team currently identifying areas where they can reduce costs throughout their whole business model - from staff costs (often your biggest controllable cost whatever your business) through to marketing, rent and consumables.

This organisation is pleasantly surprised at the significant indicative cost-savings they are now working towards and all of the team have found the process to be fun and motivating.

It is easy to lose control on spend and not look for the best deals for your business in the same way as it is easy to lose control of your personal finances.

However, it is very satisfying to save money for your business and increase your bottom line - leaving you feeling in control - just as it is very satisfying to find a bargain during a personal purchase.

But how do you start saving money and where do you look?

First - go through all of your business expenses and make a list of your say Top 10 costs.

Then work out what is a realistic and specific goal that you want to set for your cost-savings? Perhaps start with 10% and then review this figure every 3 months when you may decide to adjust it.

Asking the following questions will help you to act.

• Which of your costs is ripe for a cost saving because it is currently high? 
• Have you compared the market in this area? 
• What options are there to reduce spend in this area? 
• What criteria will you assess these options against - for example, what will you gain / lose and what will the cost be? Then what will you do?

Once you have a focus on your costs this exercise will become a healthy habit and you are more likely to stay in control of your business and increase your likelihood of staying in business.

Of course, there is more to running a successful business than controlling costs and your focus will also need to be on generating top-line sales but I have no doubt that in any business the latter is often prioritised at the expense of the former.

Focusing on cost control as well as growing your business will help you to run an effective thriving business.

If you have found this blog to be useful please leave a comment and if you would like help in this or any other area of your business please get in touch via our website at West of England Coaching and Counselling.