10 ways to Cut Costs
Report: Tony Blackie
Cost management is more critical than ever for companies faced with rising interest rates and increased economic uncertainty. Ten important steps can cut business costs.
If leadership is complacent about financial performance and cost control, there is little chance that a cost-saving project will succeed. Executives must take an interest in reviewing expenses and reducing costs – often staff will mould their behaviour to match that of management.
In the best of times or the worst of times, there are always cost pressures. With the economy booming, companies have to complete projects and contain escalating costs for staff. And when the economy turns down, there will be new pressures to reduce operating costs. Good cost management is for all seasons and for all companies.
Even when things are going well, more than 60 per cent of SMEs fail in the first three years. Of the remaining 40 per cent, all but 10 per cent are gone within the next 10 years.
A partner in the Queensland arm of global cost-reduction specialists Expense Reduction Analysts, Kevin Mercer, believes that SMEs can cut their costs by an average of 20 per cent and that the solution lies in cost management.
"A lot of businesses are experiencing revenue growth but they have not been focused on costs, which is a recipe for disaster," Mercer says. "We are currently getting a lot more work as companies recognise their debt exposure."
