Reducing expenses is one of the primary objectives of any company. Although it must always be borne in mind that this reduction should affect productivity as little as possible. We have, therefore, to make an effective cost reduction. This means that we should try to reduce investment in those superfluous factors so that we are eliminating unproductive expenses. You cannot reduce costs in any way, because the drastic decreases can lead to productivity problems that make us save in the short term and, however, have losses in the long term.
The managers must establish an in-depth analysis of each area, estimating the direct profitability of each action that requires investment. Although, we must also take care of other types of details that are not directly related to profitability, and that nevertheless also add value. For example, customer service. A department that, apparently, does not generate direct economic benefits, and in which, however, we should not consider cuts lightly. Poor customer service can lead to a drop in long-term sales. For all the above, we will provide below a series of recommendations, about where and how to cut expenses, in an efficient, controlled manner and without affecting the smooth functioning and overall development of a corporation.
These areas of the company can reduce costs:
- First, we must analyze the expenses to know how much money we allocate to each sector of the business and to be able to take stock of the expenses. Thus, we can determine in which aspects we invest more money and in which we can reduce the investment.
- The workspace or office is usually one of the aspects where you can save the most. If this is for rent, we can look for new places cheaper or reduced, since the real estate market has readjusted in prices notably in recent years. If on the contrary, it is a space in property, we could rent certain spaces, to obtain returns.
- In the office material, we could find another way to save costs. Although without being drastic, because saving too much on office supplies could make our business not work effectively.
- The company must bet on sustainability and innovation to reduce costs. The intelligent use of energy in the workplace or the use of electronic documentation are factors that are commonly used to save costs in the activity of a company, without affecting the efficiency of the processes that are carried out.
- Internet and communications are also usually open to cost reduction. There is great competition in these areas, which has generated a fall in prices in this type of service that companies should study and take advantage of.
- Financing to have liquidity. Sometimes, the activity of a company is perfectly profitable, but it runs into external factors that prevent us from undertaking certain investments, dragging down the evolution of business. Non-payments, delays and general delinquency are one of the main scourges of the economy, which has generated the closure of many organizations in recent years. Having liquidity would allow for investments that, in the long run, would end up generating cost savings. For example, in the adjustments mentioned above in the energy field that, in many cases, require an initial investment in certain types of equipment.