When you’ve started up your own business, it can feel like every day is a battle for survival. A battle to create and maintain sustained profit margins. While you will have many other metrics and KPIs by which you measure your progress and your success your gross profit margin is the metric to rule them all. But while you need to keep costs manageable, you know that being too thrifty may cause you to under-invest in your fledgling business, and this could come at the expense of the quality that you’re able to offer your customers.
So, how do you keep costs manageable without diminishing your value proposition in the eyes of the customers you’ve worked so hard to acquire and continue to work tirelessly to retain? Here are some ways in which you can manage costs without compromising your standards…
Think in terms of fiscal multipliers
When is an expense not an expense? When it actually saves you money in the long run. Investing in new technologies, talented members of staff or a new premises in a better location all have the propensity to either boost operational efficiency or increase turnover (or both). It’s simply a case of calculating the fiscal multiplier of any prospective investment. Let’s say you invest $1,000 in a new piece of software which can potentially save you $1,500 throughout the course of the year. The fiscal multiplier for that investment would be 1.5. The higher the fiscal multiplier, the greater your potential ROI.
Invest in technology that drives precision
Waste is a thief, and finding ways to exert control over it can go a long way towards driving down operational costs. Miscalculations and over-approximations when weighing, for instance, can make for tiny instances of waste which all add up as the year goes on. A digital high capacity load cell, however, can ensure that you exert granular precision even over heavy loads with clear advantages over analogue counterparts.
Don’t be afraid to haggle with vendors
Would you be prepared to give your repeat customers a 10% discount if they were to keep coming back to you at the expense of your competitors? Of course you would! With that in mind, why shouldn’t you expect the same courtesy from your vendors, especially if you already have a good relationship with them. When all’s said and done, your vendors are business owners just like you. They’re usually happy to sacrifice a percentage point or two for the sake of retaining a customer in the long term.
Be flexible with your workforce
In the digitally interconnected age, the workforce is no longer confined to the workplace. More and more employers are discovering the cost and practical advantage of remote working and outsourcing. When employees are off the premises and have the flexibility to work in whatever environment suits them best they save you the overhead costs associated with accommodating them. What’s more, they’re apt to be more productive in more familiar environments like the home.
If you’re willing to think outside the box, keeping costs manageable needn’t come at the expense of the quality on which you’ve built your brand.