Extreme Cost Saving: Are you saving money in all the wrong places?
Running a business often means dealing with cost after cost, month after month. Sometimes it can feel like no end of pain and frustration.
For this reason, managers, directors and business owners alike are constantly looking to find a new strategy that will help them improve their bottom line, because in business, every penny counts!
In order to help you run your business more effectively, we reached out to the public for their most outlandish cost-saving experience. We also spoke to business experts for their top tips when it comes to saving your business money.
Staff matter: Is your cost saving strategy negatively impacting your team?
The best way to know if you’ve made a bad decision that negatively affects your team, is to actually ask them. Employee engagement should be a top priority for any business looking to grow and thrive in the future.
Maybe you won’t want to do so outright, but looking at indicators such as their morale and happiness can give you a good indication. ‘People leave managers, not companies’; as was recently quoted in Forbes, and research conducted around the matter has certainly suggested that the sentiment is indeed true, and the same article points out the heavy costs involved with hiring anew.
So, it’s no surprise that when managers cut costs across the more trivial elements of running a business, it’s the employees who are most affected.
Which is why we’re glad we asked you to share the craziest cost-saving experiences you have encountered – here are some of the most extreme responses we got...
Don't compromise on the important things
Hygiene shouldn’t be undermined when it comes to saving money, but unfortunately it may be one of the first things to go. As perfectly demonstrated in this example from one Reddit user who used to work at a large stationary provider:
Your staff are employed to fulfil the primary responsibilities of their role, and cleaning an office is very often a full-time job in itself. When staff are expected to do both roles in the same amount of time, something is going to give. And when they’re getting paid for one of them and not the other, which do you think it is going to be?
It's all about the little things
Often it’s the little things that can end up saving people the most money. As the saying goes, ‘look after the pennies and the pounds will look after themselves’ – but there is such a thing as taking it too far.
Companies that make employees pay for facilities such as hot water can come across as petty in the wrong light, as one Facebook user revealed that this was something she had witnessed during work experience:
We asked Quora for their opinion and came across strange stories here too.
When one Web Development Manager’s employer realised the company’s internal invoice handling system was rounding tax down, instead of up – costing the company a whopping $1.04 (£0.83) a year, He was asked to address the issue.
“Year ago, I was in charge of our internal system that handled invoicing (and a bunch of other things). It was discovered that about twice a week there was an error in calculating sales tax. The system was rounding down when it should have been rounding up.”
He wasn’t best pleased either, saying: ‘it took two days to fix this. Two days of my salary and benefits, not to mention what I could have been billing out. To save a dollar a year’.
Don't focus small - look at the bigger picture
We can all agree with confidence that when your cost saving measures are more effective in lowering your employee’s happiness than they are in lowering your overheads, you’re trying the wrong approach.
What’s best for your business in the long run might be a little difficult to swallow in the short term, but it’s definitely worth it. We spoke to leading voices in their respective industries to discover their top tips on some strategies that will benefit your bottom line and won’t have a negative effect on employee satisfaction.
Outsource what you can
Outsourcing can help to ensure that jobs are done properly. Rather than having someone double up on two roles and performing both only half as well as they could, each person can focus solely on their specialty and put 100% of their skills to good use.
Max Robinson, Office Manager at Ace Work Gear offered some advice to companies on the fence about outsourcing: “I would advise other businesses to outsource as much as they can, as it is much cheaper than hiring someone in-house. This is especially true for HR/Accounting and can be done safely and inexpensively."
Max also hinted at another two areas worthy of outsourcing:
“Data storage - we use the cloud for all financial data, which makes it easier to outsource our accounting work.
“Payroll - we outsource our payroll rather than having staff in-house, which is cheaper.”
Look at all your outgoings
Some spending is inevitable, business owners and finance directors have been forced to accept this for years now. Even though no one likes spending money, it is unavoidable - things like paper, stationery and equipment like computers and desks are all needed. But it doesn’t have to cost you the earth, and there are areas where you can make some cutbacks.
With a focus on inventive ways of improving efficiency when it comes to maximising a business’ bottom line, Mark Bailey, Managing Director at printing supplier EBM Ltd. advised businesses to look at all costs that can be a source of money saving, such as printing: “The cost of printing is so often overlooked, and yet cutting costs in this area does not result in any negative impact on the business - and it has been proven that implementing an effective print strategy increases productivity too!”
Compare, switch, save!
Meanwhile Sam Boothroyd, Founder of Rymer Associates notes it is only a sign of good business ethic to constantly compare suppliers: “Whether that be on large costs like accounting software or smaller costs like stationary. Every little bit helps when it comes to improving the profit of a business.
“I once had a conference call with two recruitment agencies when we’re trying to recruit more staff. I told them both that whoever offered the lowest rate would get all my business for the next 12 months. This led to me paying an 8% fee instead of the usual 15%,” Sam continued.
Simon Monaghan, SME Consultant, with Business Doctors agreed, noting that business owners must be aware of contract end dates so that they’re not trapped in uncompetitive renewals, as well as regularly reviewing pricing and service levels against the market.
Subsequently, Phil Foster, MD of Love Energy Savings agreed with the above and offered his input: “Making sure your business is spending optimally is all about being savvy. You need to know where your money is going and whether there are any alternatives that need to be considered.
“You’re better off looking at the bigger picture of your business’ finances and asking yourself where the greatest savings can be made with the least amount of investment.
“Reducing your energy overheads is a great place to start. Finding the cheapest business gas and electricity supplier on the market is a method of cost-saving too frequently overlooked. Using a trusted third-party, like Love Energy Savings, will make it one of the quickest and simplest ways to save hundreds of pounds a year for your business. And what’s more, our team will handle the admin on your behalf, ensuring a hassle-free service that saves you both time and money.”
Here at Love Energy Savings, our expertise lies in saving you money; which is what we love to do! Compare your business energy with us today and discover what we can do for you.