Of all the types of competitive advantages a business can have, cost-efficiency is the most lucrative.
Your organization could be manufacturing top-quality products, but will still not outperform competitors if you have no control over costs. Costs define profits more than sales do. Period.
To control costs, you need an accurately-recorded income statement to identify problem areas. The income statement will not only give you a breakdown of your costs, but will also help you target the right categories where cuts need to be made. Therefore, accurate financial data is a prerequisite for cost-cutting.
You obviously can’t do much about raw material and operational costs. The kinds of costs you can control are miscellaneous, overheads, and opportunity costs.
Here are some ways you can make your business more cost-effective:
Companies outsource when they either don’t have the money or resources to carry out certain tasks.
Let’s take the example of HR. Recruitment and hiring are very resource-intensive. To recruit on your own, you’ll first have to hire a full-fledged HR department, along with all the important positions such as executives, interns, and managers.
Other than that, you’ll need stationery, excess paper, printers, computers, data servers, and extra space to accommodate personnel. And let’s not forget the utility and phone bills you’ll incur to contact candidates.
With outsourcing, you’ll only have to pay a vendor on a monthly basis. They’ll take care of all the tasks and costs on their own. All the infrastructure and payroll costs will be borne by the company. As a bonus, you’ll also get to save time and spend it on more meaningful business activities. This includes activities that are revenue-generating, or other tasks that are related to core competencies.
The scope of outsourcing is not confined to HR. Businesses these days are increasingly outsourcing web development, software design, and accounting tasks.
Printing accounts for a major chunk of your everyday stationery costs. But your human resource department doesn’t have to print all the resumes they receive. You don’t even necessarily have to send printed cards to employees on their work anniversaries—an email will suffice. You don’t even have to print out circulars and memos. The world has moved way past that.
It’s a lot more environmentally-friendly to rely on computers in the long run. There’s no need to print newsletters for guests if they’re not interested in reading. Show them presentations and PowerPoint slides instead. They’re more impactful.
Eliminate the need for hand-filled order forms. Either take orders on the phone or get a Google form designed.
One of the best ways to go paperless is to invest in a reliable cloud-based storage system. Cloud-storage is based on a network of shared servers that host all your data over the internet. The cost of servers and infrastructure is handled by the vendor. This has the dual benefit of allowing you to run a sustainable business and reduce costs.
Get accounting software
A good accountant with a reputable degree and years of experience will charge a fortune. We’re here to tell you that you don’t necessarily need to hire an accountant. With the help of accounting software, you can take care of most of your transactions yourself.
Case in point: QuickBooks.
QuickBooks can carry out almost all the activities that your accountant is responsible for. Whether you want to file quarterly taxes, generate payroll, or prepare important financial statements—QuickBooks will always be up for the job.
The biggest advantage is that the software’s interface is easy to understand and use. This means that you don’t really need external help to get about it. Your QuickBooks hosting provider will help you implement, understand, and use the software on your own.
It’s not even too expensive. For most small businesses, QuickBooks Pro hosting works as a feasible option. It can accommodate around 3 users at a time. Both you and your partner can work on it simultaneously.
If you want to achieve cost-efficiency for your business, get in touch with gotomyerp. We help small and medium scale enterprises streamline their accounting processes with the help of QuickBooks. To take a look at the different versions of QuickBooks that we offer, head over to our website.