Every business spends, and at times loses, money. How you plan for and manage that can be the difference between a thriving company and one that quickly disappears. There are plenty of financial obligations to running a business (operational and compliance, to name just two), but there are some simple things you can do to manage your existing assets and costs. Asset management is a crucial (albeit often overlooked) business task.
Maintain an Asset Review Cycle
If you haven’t done so already, you need to conduct an extensive inventory of your existing assets. And keep in mind that assets go beyond just investments like stock and bonds. It’s any useful or valuable person, item, or quality. Look at your office equipment (computers, copier, fax machine), production machinery, software, personnel, facilities...everything. What is being used, by whom, and for what purpose? Does the current function and usage equal the cost involved (for rental, maintenance, purchase, user fee, etc.)? If not, get rid of it. If yes, fantastic. Schedule your next review to reevaluate in the near future. A strategic asset management plan is of the utmost importance.
Look for Alternatives
There is never just one way to do something, one product to fill a need, or one company providing a particular service. Look around. Do some comparison shopping when it comes to your business expenses. It’s a good idea to make an annual or semi-annual comparison part of your review cycle, as new products, services, and players emerge all the time. Dropbox, for example, is a great cloud service provider, but you also have Box, and Google Drive. Their feature set differs slightly, but so does their overall cost. Which one is right for you, offering the best return on the features that you actually need? Are you paying for features that you don’t need?
Invest in Efficiency
You’ve heard the expression “It takes money to make money”, right? You can’t be afraid to spend in order to earn. More specifically, you need to invest in better efficiency for your business. While it may be cheaper to maintain the equipment and software you are currently using, you need to take a long-term approach to things. Would an investment of several thousand dollars to replace something now ultimately save you money down the road? Would outsourcing certain tasks (like marketing, or copywriting) be cheaper than having someone on staff? Would training your employees in new methods and techniques increase production? The answer might not always be “yes”, but you definitely need to be asking the questions. And you can’t be afraid to slap down the cash today to invest in the future.
Evaluate Your Supply Chain and Distribution Network
Take a look at your supply chain for everything. Office supplies to production materials. Is it optimised? Is there a better, cheaper, newer option suddenly available? Is it possible to consolidate two separate providers into one, giving you greater bargaining power and bulk discounts? Can you renegotiate the terms because of greater volume now than when you started? Again, cheaper is automatically better, but you need to evaluate frequently to make that decision. And in terms of better terms and prices, you won’t know unless you ask or investigate. Speaking of which...
The difference between a good price and a great price (for a product or service) is often simply ASKING. Negotiation is sometimes viewed as distasteful for some odd reason, but when done properly (respectful, cordial, and after having done your research), it needn’t be. And there’s a difference between asking (and explaining the reasons why it makes sense for both parties) and demanding. Asking a credit card company for a better interest rate - believe it or not - often works. Asking for better payment plan options on large purchases (lower interest rate, longer time period) often works. What does the market currently support? What are competitors charging? Do some research, provide some basic statistical evidence, and ask. If you don’t ask, you’ll never know. Do you want to pay more for something simply because you couldn’t be bothered to ask for a better price or rate? Of course not.
Automate Where You Can
This doesn’t refer to an assembly line (although it could). There are other opportunities to automate repetitive tasks, thereby saving time and money. Modern software and IT equipment will often provide everything you need to make something that used to take an employee hours to do and automatic and hands-free job. Companies like ccScan, for example, make digitising, archiving, and scanning to the cloud almost entirely automatic. Yes, there is a cost involved (invest in efficiency, remember?), but it’s no stretch to assume that you’ll save tens or hundreds of hours of employee time. And that adds up.
Involve Your Employees in the Budgeting and Reviewing
The best practice when it comes to budgeting (and especially budget, equipment, and staff cuts) is to involve your staff in the entire procedure. No one likes being told that they are inefficient, or cost-prohibitive, or unnecessary. Employees are both a cost and an asset (and a very, very valuable one at that). Get them in on the conversations. They are the ones “in the trenches”, so to speak, and know the truth about what, why, and how. Honest conversations about costs, possible alternatives, and possible solutions (cuts, outsourcing, etc.) with the people it affects most will matter, and make changes and adjustments that are much easier to implement. On top of all that, it reminds your staff that they are a crucial cog in the machine.
Budget for Maintenance, Improvements, and Expansion
Last but certainly not least, you need to budget each year (or quarter, or however else you plan) for operational costs, maintenance (of existing assets), improvements (upgrades to existing assets), and expansion (the purchase of new assets). These four are the cornerstones, and each one is as important as the next. Businesses that thrive budget accordingly.
People are assets and a cost at the same time. Equipment is an asset and a cost. Services, facilities, and distribution are also both an asset and a cost. You need to review, budget, and evaluate each as frequently as possible. Only then can you really have a detailed and current idea of the costs involved, and the ways you could manage and lower them.