In business and in life, one of the major influencing factors for our day-to-day decisions has to be a consideration for the costs. It is an extremely-crucial factor because it can influence everything else – from the resources that we can acquire, to the next decisions that we make. It’s no secret that money makes the world go around. For businesses, cost control is a factor that, regardless, of the type and size of the business, remains one of the biggest decision-making influencers. Business schools tell us that the primary objective of a business is to control their costs, increase their revenue, and maximize profit – a principle that requires heavy balance and analysis on the operations of the business.
Despite this being their primary focus, many business owners still find it difficult to achieve complete cost control over their cost base with today’s extremely challenging business climate. Many business owners also have a preconceived notion that more expenditures and investments yields more results that will later on let them worry less of their costs with the ROI (return of investments) that will come in later – which isn’t wrong but oftentimes backfires instead. Oftentimes, business owners fail at this because they make the wrong decisions and focus on the wrong things, thereby hurting the results of their efforts. They are “working hard but not working smart”, as the saying goes.
The situation isn’t also helped by the fact that, for growing small and medium businesses, controlling cost becomes more challenging as the need for additional technology, workforce, and inventory increases. It’s almost regrettable to spend so much for these aspects, but business owners know that they cannot hope to grow and be more successful by scrimping on what their business needs the most in order to keep up with their competition, their market’s demands, and their own requirements. It’s a constant push and pull scenario that can leave many business owners confused on which decision to take. Even big companies go through this sort of cost control dilemma, but the impact is much more felt by SMB owners.
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To help your business cost control better, here are the key takeaways that you should know:
- Renegotiate contracts with vendors annually
- Sell to the right customers
- Make expenses variable instead of fixed
- Ask vendors to hold unsold inventory
- Hire freelancers to save on overhead
Learn more about these points and how they can help you cost control with the infographic on the subject by BrainBoxol.