Reducing costs is one of the major challenges facing any company. In today’s economic climate, this is all the more true. Implementing a cost-cutting strategy is one of the levers enabling a company to increase productivity, and therefore sales. Here are a few tips to help you become more profitable.
What is cost reduction and why should we be interested?
Cost reduction is a set of techniques designed to considerably reduce a company’s expenses. This mainly concerns expenses that are unnecessary or can even be eliminated. A company can take action in various areas, such as production, marketing and distribution. The main task of cost reduction is to focus on the price of items that do not play an essential role in the company. In order to identify areas for improvement, an internal audit can be carried out beforehand.
This video can explain it more:
Implementing a cost-cutting strategy allows you to optimize one of your most important assets: productivity. Improved productivity will inevitably lead to higher profits. Any manager wishing to adopt such a strategy is well aware that the resources at his or her disposal are limited, and must therefore be optimized as far as possible.
How to cut costs in your business?
Reducing taxes: The last item to be studied closely in order to reduce costs is taxation. After all, every company cannot afford to ignore its taxes. But with legislation constantly evolving, it’s crucial for a company to keep on top of this area. For example, the calculation of property tax is often based on information taken at the time of construction of the building. However, some managers are unaware that certain improvements they have made may entitle them to a tax reduction. In such cases, a chartered accountant is highly recommended to provide the company with the best
possible guidance. Cost reductions can vary, and can be achieved in a number of ways:
Financial aid for the recruitment of disabled employees, tax credits for innovation, research, management training, etc., donations to associations. Reducing costs isn’t just a pipe dream. There are many ways to effectively reduce costs and generate savings that can sometimes be substantial. Analyzing expenses is therefore essential for any company, as is keeping a constant watch on strategic points that can be reduced.
Reducing overheads
Here again, overheads represent a very important item: between 15% and 25% of a company’s sales. These costs are therefore not to be underestimated, and should be closely monitored in order to reduce costs. Overheads are so called because, in reality, they are indirect expenses that are not involved in the design of a product or service. These costs generally include: rent, office supplies, computer equipment, electricity, gas, telephony, travel expenses, catering costs, etc.