Increase Your Margins by Managing Your Costs

In today's economic climate with budgets being cut across the board, the UK economy contracting in the last Quarter of 2010 and inflation rising, both Public and Private sectors are looking to maintain their financial stability. A decision to increase prices is a sensitive issue and could prove to be unpopular with customers. It is a gamble that all organisations face. Cutting costs could be a way forward. However, one must be careful how far and how deep those cuts go, as inevitably such cuts may cost an organisation a lot dearer than leaving things as they are.

In my dealings with businesses, I found that it is a carefully thought through combination of the two that works best: a sensible price increase along with cutting unnecessary costs. Here are just a few "easy wins" tips on how an organisation might increase their margins by reducing some of the costs:

1. If you are still sending your invoices and statements the old-fashioned way (i.e. by post), consider switching to electronic options. Send your invoices and statements by email and save money on paper, envelopes, ink cartridges, postage and time to print, fold, insert and post the documents
2. Instead of sending individual invoices for every order, consider switching to monthly consolidated invoices to your clients
3. Switch to sending your correspondence by 2nd class: Second class items posted on a Friday will arrive at the same time as the First class items posted on a Monday
4. Don't send out single sheets of paper in C4 envelopes: these will cost your business up to 38% more than a letter (DL envelope)
5. Ensure that your staff switches all unnecessary equipment off when unused: this will save your organisation money on energy bills
6. If you have commercial premises, consider investing in technology that will not only compliment you existing Heating & Colling system, but will save you substantial amount of money on energy bills, maintenance and prolong the life of your assets (check out http://www.mowjo-e.com/, or better still, get in touch with them!)
7. Talk to your bank: if your business does not borrow or does not breach its facilities/covenants, your pricing levels may be overlooked by your bank. Consider meeting with your Bank Manager to review your arrangements and price plan
8. Consider company credit/charge cards for you and your staff: this will reduce the number of cheques issued and improve your cashflow with an interest-free period of up to 45 days! You can easily monitor expenses and reduce your administration burden of petty cash
9. Switch your customers from paying by Standing Orders to Direct Debits: there are number of benefits to be had from this. Firstly, your customers will have a peace of mind by being protected under the Direct Debit Guarantee Scheme; secondly, you will save money on administrative costs of your Accounts Department checking each line of the bank statement to see who hasn't paid; and thirdly, you can save on bank charges per transaction received, which is normally a fraction of the cost of a transaction received by a SO
10. Avoid calling 118 (Directory Enquiries) and 0870/0845 etc. numbers. The same information is available online and it's FREE! If you are unable to find a required number on the Internet and must use Directory Enquiries, do not accept an offer to be put through by an operator - you will be charged up to 50 times more per minute than if you dialed a number yourself (http://www.saynoto0870.com/)

Of course, the above list is not exhaustive and there are plenty of other means and strategies to reduce costs in your organisation. However, it's a start! So, good luck and do drop me a line if you'd like to learn more on how your business can save and make money!