Cut Down Hard Costs Without Impacting Business Performance
Posted On April 6, 2023
Running a self-sustaining business is altogether a different ball game. Businesses require control over multiple streams of operations- marketing, administration, finance, human resources, and many more. In reality, businesses require equilibrium in all aspects of metrics in order to achieve business cost optimization. Today we are going to talk about one of the most common concerns that are neglected by the majority of businesses around the world- How can you reduce your costs without affecting your business performance?
Profits are important and while keeping revenue more than expenses may seem obvious, it is not really a cakewalk. Ask any businessperson and they will have stories about it. To improve the top line and revenue along with reducing the expenses, multiple efforts are required such as business cost optimization and enhanced business performance. Innovation, cost cutting, resource utilization, market research, and modeling may seem fancy terms but form an essential part of any business. A deep understanding of business processes, cost optimization, and looking at details is required.
Understanding Hard Costs
What exactly are hard costs? Hard costs are expenses that you cannot get away from. These are costs that are essential to the very existence of your business- so obviously they cannot be reduced, right? There are ways in which these hard costs can be optimized and the overall efficiency maintained without impacting the business performance.
Broadly, hard costs can be COGS or Cost of Goods Sold and SG&A or Selling, General & Administrative expenses. COGS refer to the direct cost of producing a product or service, it determines a lot about your business’s financial efficiency and performance. COGS could be ● Rent ● Payroll ● Utilities ● Inventory ● Insurance
SG&A on the other hand refers to fixed costs for running the business smoothly. ● Logistics, shipping, and insurance cost ● Marketing cost ● Selling cost (Wages, commission)
Saving Costs is Easy- Provided you Don’t Care about Business Performance
You need finances and money to run a smooth business. But cost-saving need not be as hard as it is portrayed. A common myth is that saving costs is extremely difficult- that is not the reality. Of course, if you start cutting down on your hard costs, that can impact your business. This is why understanding what costs to cut is of immense value.
Especially after the pandemic, running a business on a limited budget and controlling your expenses has been understood by many entrepreneurs. This has been done through optimized spending, prioritization, and careful planning. While varying costs such as marketing, brand building, etc. may seem easy to cut down on, it is the hard costs that prove difficult. But these hard costs can also be controlled to regulate spending. All of this, however, cannot be at the cost of your business performance.
Because- business performance is key!
With cutting costs, there are multiple issues that need to be handled such as brand image and its effect on your investors. Cutting costs can also affect employee hiring or dissatisfaction among certain employees, leading to churn. Important aspects such as long-term value creation, brand image, investor relations, customer satisfaction, and competitive advantages need to be kept in mind. The most important thing, therefore, is to consider your business performance. Cutting costs is an option only if you know the answers to all these questions and your business performance does not get affected by it.
So is it possible to cut hard costs without impacting business performance?
And that too without any upfront cost!
Data Science, clear strategies, detailed processes, and specialized solutions can do the trick. Business performance remains high, your costs are reduced and you end up running a better business. Interested to know how it’s done? Keep on reading…
Our approach is about business process modernization. It is about understanding the problem through conversations with people facing the issues in the business and then creating out of box ideas that can be implemented followed by monitoring the results. We start by clearly defining the business problem and articulating it with the stakeholders to arrive at a solutions exercise. This is followed by our Solution Methodology where we use various elements to optimize your business like – Strategy – Process – Data Science – Artificial Intelligence – Cost Saving Algorithms – Proven solutions – Change management
We at TruVs ensure that we provide what we have promised you with regard to your business performance. With more than a decade of experience in providing solutions for businesses using technology, we understand your problem better than anyone else. We aim at providing optimum business results through our Solution Methodology that ensures cost-cutting without affecting your business performance. Moreover, we use cutting-edge technology to help modernize your business and innovate your business processes. We at TruVs strategize and process the data. Along with Data Science, we utilize proven solutions to bring about a change in the management to provide you with result-oriented solutions for your cost cutting.