Increase Your Profits By Buying Better
When looking at increasing your company’s profits it is important to look at both ends of your business, the incomings and outgoings. It would be wonderful if we had full control over all of the incomings of our business and could dictate how often our customers are going to use our services and how much we want them to spend. Unfortunately we are not in control of this, we can of course guide this area with marketing, but ultimately the power is in the hands of the client.
Where we have power and control is the outgoings of our company, what we choose to spend our money on, who our suppliers are and often how much we pay them. When we say suppliers we can also mean employees as they are supplying your business with a payable service.
So how much do we really look at our outgoings? We might consider two or three suppliers when we begin a relationship to compare pricing, value, service etc. but what about after that? How often do you review where the money in your business is going?
By implementing supplier management and capacity and availability management processes you can really save your company money and improve your cash flow.
As consumers we all know that businesses are battling against each other for our business, for example broadband and TV companies – they always have a new deal to entice us in and take us away from their competitors. Now we don’t want to spend our days just looking for the best deals with suppliers because in business, time is money. However it is important to regularly evaluate the services and products we have chosen to ensure that they fit with the needs of the company. You should ask yourself these questions:
How much are you paying?
Look at how much you pay for the service you receive and contact a few other suppliers and compare the prices for the service. By understanding what other suppliers are charging you will have a better idea of your supplier’s pricing. You can use this information to reduce costs with your current supplier or even change to a more affordable one.
What service am I receiving?
When looking at other suppliers for the services you buy, look at what packages they offer. Are there other packages that might meet your needs better? By buying more intelligently you can improve the efficiency in your business and reduce particular processes. For example if you are selling products you have bought from a supplier, is it possible for the supplier to package and distribute their products straight to your customers with your branded packaging? You could be saving a lot of time and money by reducing delivery turnarounds, as well as storage costs.
Is my business using the product or service most efficiently?
You also need to review how your staff use the service you are being provided with, have the processes been developed to maximise the service? If staff are trained properly to use a service your business can save money. A great example is accounts, if you use an external accountant they will base the annual fee they charge you on the state of your accounts throughout the year. If staff are trained to supply expenses in a particular way for example, you could save your company a lot of money in accountancy fees.
Is there an element of waste, if so how much?
Another thing to look for is waste, when we say waste, we don’t just mean things that have to be thrown away, we also look at items that are not used within a particular time frame. Review what has been purchased and what is not used and look at whether you can save your company money next time. By looking at what your company wastes we can identify what resources are needed and use that information to be better informed in the future.
These are just a few areas in which process improvement can reduce your costs, if you would like to find out more, please contact us and we will be happy to help.